1. McCulloch v. Maryland 1819

2. Background  April 1816 Congress chartered the Second National Bank  Some people felt that the National Bank harmed State economies and businesses  Maryland Passed a Stamp tax on paper used to make money – only for Federal Banks affecting the National Bank  James McCulloch refused to pay the tax and the state of Maryland brought a suit against him.

3. Question Before The Court  Does any state have the right to tax the United States Government (Federal)?  Is the National Bank legal – underlying question

4. Arguments  Maryland Did have the right to tax because it was not forbidden by the Constitution Did have the right to tax because it was not forbidden by the Constitution The National Bank is not even legal The National Bank is not even legal  McCulloch States forbidden to tax anything of the National government beyond real property Necessary for Congress to create and coin money, collect taxes and borrow money Necessary and Proper Clause – Elastic Clause

5. Result Supreme Court said: National Bank is legal b/c of Necessary and Proper Clause Since it is legal the tax is a violation of the principle of National Supremacy

6. Why was this important?  Goes to the root of the Federal government and establishes that limits of power exist but there remained enough power at the federal level for Congress to carry out what was necessary and proper