In the 1896 case of Wisconsin Central Railroad Company v. United States, the U.S Supreme Court ruled that a railroad company's land grant was taxable by federal authorities. The Wisconsin Central Railroad Company had received a large land grant from Congress and argued that this property should be exempt from taxation because it was given for public purposes. However, the court disagreed with this argument stating that while lands granted to states are not subject to taxation, those granted directly to corporations like railroads can be taxed under existing laws. This decision upheld an earlier ruling by a lower court which stated that such grants were indeed taxable as they constituted real estate assets owned by private entities rather than government bodies or agencies serving public interests.

In the dissenting opinion for Wisconsin Central Railroad Company v. United States, 1896, Justice Harlan argued that the majority's decision was inconsistent with previous rulings and interpretations of the Commerce Clause in relation to state taxation power. He contended that a tax on gross receipts from interstate commerce did not necessarily constitute an unconstitutional burden on such commerce. According to him, it was essential to consider whether or not these taxes were discriminatory against interstate business operations compared to intrastate ones. If they were not discriminatory but rather applied equally across both types of businesses, then he believed they should be deemed constitutional as per past precedents set by court decisions like Coe v Errol (1886). Furthermore, he emphasized that states had inherent sovereign powers which included levying taxes within their jurisdiction unless explicitly prohibited by federal law or constitutionally impermissible.