McCulloch v. Maryland

McCulloch v. Maryland, Supreme Court, 1819

Facts of the Case

In 1816, Congress established the Second Bank of the United States. In 1818, the state of Maryland passed legislation to impose taxes on the bank. James W. McCulloch, the cashier of the Baltimore branch of the bank, refused to pay the tax. Maryland sued McCulloch, and the state courts ruled in favor of Maryland. McCulloch appealed to the Supreme Court, arguing that the establishment of the national bank was constitutional and that Maryland’s tax was unconstitutional.

Constitutional Question

  1. Does Congress have the authority to establish a national bank?
  2. Can a state tax a federal institution?

Arguments

For McCulloch (the federal government):

  • The establishment of a national bank is a “necessary and proper” means for executing Congress’s enumerated powers, such as regulating commerce and managing finances, as granted by the Necessary and Proper Clause of the Constitution.
  • States do not have the authority to tax federal institutions, as this would undermine federal supremacy and violate the Supremacy Clause of the Constitution.
  • Allowing states to tax federal institutions would grant them undue power over federal operations and potentially disrupt national functions.

For Maryland:

  • The Constitution does not explicitly grant Congress the power to establish a national bank, and thus, such a power should be reserved to the states under the Tenth Amendment.
  • States have the sovereign right to tax businesses and institutions operating within their borders, including federal entities.
  • Taxing the bank does not interfere with the federal government’s constitutional functions but rather ensures equitable treatment of all businesses within the state.

The Decision

The Supreme Court, in a unanimous decision, ruled in favor of McCulloch. Chief Justice John Marshall, writing for the Court, held that Congress had the authority to establish the national bank under the Necessary and Proper Clause, which grants Congress the power to pass laws needed to execute its enumerated powers. The Court also ruled that Maryland’s tax on the bank was unconstitutional because federal laws have supremacy over state laws, and “the power to tax involves the power to destroy,” meaning that allowing states to tax federal institutions would give them undue power over federal operations.

Significance

McCulloch v. Maryland is a landmark case that established two important principles in constitutional law:

  1. The doctrine of implied powers: The decision affirmed that Congress has not only the powers expressly granted by the Constitution but also all authority “necessary and proper” to carry out those powers.
  2. Federal supremacy: The ruling reinforced the Supremacy Clause, establishing that federal laws and institutions take precedence over state laws and institutions.

This case significantly expanded the power of the federal government and provided a broad interpretation of congressional authority, shaping the development of American federalism and the balance of power between the federal government and the states.