McCulloch V. MarylandMcCulloch V. Maryland18191819

Background Info/FactsBackground Info/Facts- Second Second National Bank established in Maryland National Bank established in Maryland - Many people opposed the bank being established in the Many people opposed the bank being established in the

state of Maryland so…state of Maryland so…- Maryland placed a tax on the bank Maryland placed a tax on the bank since it was residing since it was residing

in the state of MDin the state of MD- James McCulloch (bank clerk) wasn’t obeying the taxJames McCulloch (bank clerk) wasn’t obeying the tax- McCulloch taken to court and was ruled against for McCulloch taken to court and was ruled against for

breaking state law of NOT imposing the taxbreaking state law of NOT imposing the tax* Case appealed to the highest court level* Case appealed to the highest court level in MD and went to Supreme Courtin MD and went to Supreme Court

Amendment/Issue ChallengedAmendment/Issue Challenged

- National Law V. State LawNational Law V. State Law

- Does congress have the power to Does congress have the power to establish a bank in the state of establish a bank in the state of Maryland??Maryland??

- Does the state of MD have the power to - Does the state of MD have the power to tax the bank for being established??tax the bank for being established??

RulingRuling

1.1. Congress HAS the power to establish a Congress HAS the power to establish a national bank in the state of Maryland!national bank in the state of Maryland!

2.2. Maryland DOES NOT have the power to tax Maryland DOES NOT have the power to tax the bank!the bank!

* taxing a national institution is an indirect tax on * taxing a national institution is an indirect tax on citizens of other states citizens of other states UNCONSTITUTIONAL!UNCONSTITUTIONAL!

SignificanceSignificance

* States are bound to obey the Constitution * States are bound to obey the Constitution under the under the Supremacy Clause Supremacy Clause (Supreme (Supreme Law of Land)Law of Land)

* * Necessary and Proper Clause – Necessary and Proper Clause – establishing banks is not listed in Const., establishing banks is not listed in Const., but to do what is “necessary and proper” but to do what is “necessary and proper” to carry out commerce and monetary to carry out commerce and monetary issues is!issues is!