McCulloch v. Maryland (1819)
Early in the history of this nation, Congress established a federal bank better deal with federal monetary issues. The State of Maryland, wanting banking business to be done with the state banks, placed a tax on "all banks not chartered by the state," including a branch of the federal bank. McCulloch, who worked in the Baltimore Branch of the Bank of the United States of America, refused to pay the tax to the state. Maryland brought suit against him. The two issues in this case were whether the United States government had the right to set up a national bank and whether the State of Maryland had the power to tax it. The Court stated that as per the "necessary and proper clause" and Congress' expressed powers to lay and collect taxes and borrow money, Congress has the power to create a federal bank. Furthermore, the Supreme Court ruled that Maryland could not tax the federal bank because the "power to tax involves the power to destroy" and that a state did not have that power over the institutions of the national government.
Copyright © 1997 Jonathan Chin & Alan Stern