McCulloch v. Maryland (1819) -

Background:

In 1816, the Second Bank of the United States was chartered by the federal government. James McCulloch was the cashier of the Baltimore branch of this bank.
The state of Maryland, in an attempt to undermine the bank and protect its own state-chartered banks, imposed a tax on all banks not chartered by the state of Maryland, including the Baltimore branch of the Second Bank of the United States.
McCulloch, as the bank’s cashier, refused to pay the tax, and Maryland sued him for failing to pay the tax.

Issue:

The primary issue in the case was whether the state of Maryland had the authority to tax a branch of the Second Bank of the United States, which was a federal institution.
Additionally, the case raised the broader question of the scope of federal power and whether the federal government had the authority to establish a national bank, even though the Constitution did not explicitly mention the creation of such an institution.

Decision:

Chief Justice John Marshall, writing for the Supreme Court, delivered a unanimous opinion in favor of McCulloch and the federal government.
The Court held that the state of Maryland did not have the authority to tax the federal bank because “the power to tax is the power to destroy,” and such a tax would interfere with the operations of a federal institution.
Marshall also established the principle of implied powers, stating that while the Constitution enumerates certain powers of Congress, it also contains a necessary and proper clause (the Elastic Clause), which allows Congress to use its enumerated powers to carry out its functions effectively. Thus, the creation of a national bank was within the implied powers of Congress.
In essence, Marshall’s ruling upheld the supremacy of federal law and federal institutions over state law in cases where they came into conflict.

Significance:

McCulloch v. Maryland is a landmark case because it reinforced the supremacy of federal law and federal institutions over state law.
It clarified the scope of federal powers and established the principle of implied powers, allowing Congress to take actions necessary and proper for carrying out its enumerated powers.
The case set an important precedent for the relationship between federal and state governments, confirming that states could not interfere with or undermine the operations of federal institutions through taxation.
McCulloch v. Maryland played a crucial role in defining and strengthening the federal government’s authority and its ability to carry out its functions, particularly in the realm of economic policy and finance.
The decision remains influential in debates over federalism and the balance of powers between the federal and state governments.