McCulloch v. Maryland
4 Wheat. (17 U.S.) 316, 4 L.Ed. 579 (1819)
Author: CJ

Facts:  The state of Maryland passed a law that imposed taxes on all the banks located in its territory that are not chartered by its legislature.  The branch of Bank of the United States fell under this law.  The cashier of this Bank, McCulloch, refused the pay the taxes and claimed that the state cannot tax the national bank.

Procedure: The state court ruled against McCulloch and the Maryland Court of Appeals affirmed.  The case was taken by writ of error to the Supreme Court.

Issue: 1. Does the Congress have the power to incorporate a bank? 2. Can the state of Maryland tax the branch of the Bank of United States without violating the Constitution?

Holding: 1. Yes, 2. No

Rationale:  The government is given the great powers in the Constitution to lay and collect taxes; to borrow money; to regulate commerce, to declare and conduct a war and to raise and support armies and navies. Furthermore, the Congress is given the right to pass “all laws which shall be necessary and proper for carrying into execution the foregoing powers…”  The word necessary does not mean that congress can pass laws that are absolutely necessary for the implementation of its powers, but Congress is given the discretion to implement ways that it thinks are most efficient in carrying out the powers that are granted by the Constitution (e.g. Post office example).  Furthermore, since the necessary clause was placed among the powers of Congress and not its limitations, it can be seen that the word “necessary” was not included in the Constitution to limit the power of the Congress.  Therefore, if Congress sees it best to incorporate a bank to carry out the power that is assigned by the Constitution, it is permitted under the Constitution to do so.  As far as the second issue is concerned, Justice Marshall stated that according to the Constitutional scheme, the federal government is supreme to the state governments. “That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create; that there is a plain repugnance, in conferring on one government a power to control the constitutional measures of another, which other, with respect to those very measures, is declared to be supreme over that which exerts control, are propositions not to be denied.”  Furthermore, when a state taxes an institution of the federal government, it is invading the rights of people of other state on whom it has no right to exert its power.  Reversed.