The Supreme Court case McCulloch v. Maryland established that Congress had the power to establish a national bank and that a state (in this case, Maryland) did not have the power to tax branches of the federal government that are carrying out powers legal in the Constitution. Chief Justice Marshall wrote that the states did indeed have the power to levy taxes, but that the federal laws control the laws in the states, which cannot control the federal institutions.Continue Reading
The background of this case began in 1816, when Congress issued a charter for the Second Bank of the United States. Two years later, the state of Maryland passed a law imposing taxes on the bank. The cashier in the Baltimore bank branch, James W. McCulloch, would not pay the tax, so the litigation began.
The Supreme Court decision in McCulloch v. Maryland was a unanimous 7-0 (the Supreme Court would grow to its current size of nine justices later). The legal foundation of the decision was Article I of the United States Constitution, Section 8, Clauses 1 and 18. The notion of the country operating a bank caused significant controversy throughout the early nineteenth century, leading President Andrew Jackson to lead a charge to "break the bank."Learn more about Law