McCulloch v. Maryland,
Part II case brief summary
17 U.S. 316 (1819)
Issue
May Maryland tax the second Bank of the United States?
Holding
Maryland may not tax the Bank.
Reasoning
The power to tax is the power to destroy. Left unchecked, taxation of federal institutions by the states might undermine the federal government entirely. Although Maryland correctly observes that the states have broad discretion in levying taxes within their respective territories, it is equally important that the Constitution has limited the states’ power of taxation in crucial respects. The states, for instance, are forbidden from levying imposts or duties except what may be absolutely necessary. Such limitations are intended to assure the supremacy of the federal government. The federal government is supreme because it was formed by the people of the entire United States, not by the people of any single state. The decision whether to tax a federal institution such as the Bank therefore lies with the national legislature. Allowing Maryland to tax the Bank would allow the people of a single state to influence an institution that requires the consent of all. Such a state of affairs is unacceptable, as the people of any one state could not be imagined to entrust even the most minor functions of their own state government to another state. It is also no argument to say that the states can be trusted to restrict taxation to certain institutions. Those advancing this argument have stated no basis on which one might distinguish taxable institutions from non-taxable ones. Maryland has exceeded its authority in attempting to tax the operations of the Bank itself, as opposed to property held by the Bank.
17 U.S. 316 (1819)
Issue
May Maryland tax the second Bank of the United States?
Holding
Maryland may not tax the Bank.
Reasoning
The power to tax is the power to destroy. Left unchecked, taxation of federal institutions by the states might undermine the federal government entirely. Although Maryland correctly observes that the states have broad discretion in levying taxes within their respective territories, it is equally important that the Constitution has limited the states’ power of taxation in crucial respects. The states, for instance, are forbidden from levying imposts or duties except what may be absolutely necessary. Such limitations are intended to assure the supremacy of the federal government. The federal government is supreme because it was formed by the people of the entire United States, not by the people of any single state. The decision whether to tax a federal institution such as the Bank therefore lies with the national legislature. Allowing Maryland to tax the Bank would allow the people of a single state to influence an institution that requires the consent of all. Such a state of affairs is unacceptable, as the people of any one state could not be imagined to entrust even the most minor functions of their own state government to another state. It is also no argument to say that the states can be trusted to restrict taxation to certain institutions. Those advancing this argument have stated no basis on which one might distinguish taxable institutions from non-taxable ones. Maryland has exceeded its authority in attempting to tax the operations of the Bank itself, as opposed to property held by the Bank.
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