In the case of Wright, Comptroller General of Georgia v. Louisville and Nashville Railroad Company (1914), the U.S Supreme Court ruled in favor of the railroad company. The state of Georgia had imposed a tax on all railroads operating within its borders based on mileage covered by their tracks. However, this tax was not applied to out-of-state companies whose trains merely passed through Georgia without picking up or dropping off passengers or freight. The Louisville and Nashville Railroad Company argued that this taxation system violated both the Due Process Clause and Commerce Clause of the Constitution because it unfairly discriminated against interstate commerce businesses like theirs which operated extensively within Georgia's boundaries but were headquartered elsewhere. The court agreed with them, stating that while states have broad powers to levy taxes for revenue purposes, they cannot do so in a way that discriminates against interstate commerce or violates constitutional protections afforded to such enterprises under federal law. Therefore, it held that any state-imposed tax must be fairly apportioned among all entities conducting business within its jurisdiction irrespective of whether they are domestic or foreign corporations.

In the dissenting opinion for Wright v. Louisville and Nashville Railroad Company, Justice Holmes disagreed with the majority's decision that Georgia's tax on out-of-state railroad companies was unconstitutional. He argued that states should have the right to impose taxes on businesses operating within their borders, regardless of where those businesses are incorporated or headquartered. He believed this taxation power is essential for states to maintain their sovereignty and financial independence. Furthermore, he contended that such a tax does not violate the Commerce Clause of the U.S Constitution as it doesn't discriminate against interstate commerce but rather treats all corporations equally whether they are in-state or out-of-state entities. The justice also expressed concern about potential negative impacts on state revenues if they were prohibited from taxing out-of-state corporations doing business within their jurisdictions.