328 U.S. 408 (1946), argued 8 and 11 Mar. 1946, decided 3 June 1946 by vote of 8 to 0; Rutledge for the Court, Black concurring in result without opinion, Jackson not participating. South Carolina imposed a 3 percent tax on the premiums received by out-of-state insurance companies from policies written in the state but did not impose a similar tax on South Carolina corporations. The Prudential, a New Jersey corporation, argued that in light of the Court's decision in United States v. South-Eastern Underwriters Association (1944), such a discriminatory tax imposed a burden upon interstate commerce and therefore exceeded the powers of the state. Congress, however, had reversed the South-Eastern decision in the McCarran Act of 1945 and explicitly delegated to the states the power to regulate and tax insurance companies.
Justice Wiley Rutledge's opinion assumed that a tax discriminating between in-state and foreign corporations constituted a violation of the Commerce Clause, but the Court upheld the tax in this case because Congress had “consented” to state regulation of insurance even if such regulation impinged on interstate commerce. Where earlier cases had held that states could act if Congress had failed to exercise its authority (e.g., Cooley v. Board of Wardens of the Port of Philadelphia, 1852), here the Court approved a “consent” authority for states to do what they would otherwise be barred from doing, namely regulating some aspect of interstate commerce.
Melvin I. Urofsky