Citation. 17 U.S. (4 Wheat.) 316 (1819)
Brief Fact Summary.
Congress established a federal bank, and Maryland passed a law that imposed a tax on that bank’s branch in Maryland.
Synopsis of Rule of Law.
Congress has the authority to establish a federal bank. States may not tax the federal bank.
In 1816, Congress passed a law incorporating a federal bank. In 1818, the Maryland legilsature passed an act imposing a tax on all banks that were not chartered by the Maryland legaslature. The Bank of the United States established a branch in Baltimore, Maryland, and refused to pay the state taxes required by the Maryland law.
- Does Congress have the power to incorporate a bank?
- If so, can a state tax the bank that Congress incorporates?
- Yes, Congress has the power to incorporate a bank.
- No, a state cannot tax the bank that Congress incorporates.
- The Supreme Court held that even though incorporating a bank is not an enumerated power established by the Constitution, the federal government has incidental and implied powers. The Supreme Court cited the fact that the Constitution, even the Tenth Amendment, omits restrictive language when establishing the powers of the federal government. The Supreme Court also found that the enumerated powers, including the powers to law and collect taxes, borrow money, and regulate commerce, come with ample powers for their execution. The Supreme Court went on to analyze the Necessary and Proper Clause. The Supreme Court performed a textual analysis of the word “necessary” as used in the clause, and held that the clause is not meant to be a restriction on federal legislative authority. The Supreme Court also relied on findings that the clause was placed among the powers of congress in the Constitution, not the limitations on those powers, and that the terms of the clause purport to enlarge the powers vested in the government, not to diminish them. According to the Supreme Court, legislation is constitutional as long as the aim of the legislation is legitimate, within the scope of the Constitution, and all means are appropriate and plainly adapted to that end, and not prohibited by but and consistent with the letter and spirit of the Constitutional. The Supreme Court held that the incorporation of a bank was constitutional.
- The Supreme Court argued that the Constitution and the laws made in pursuance of it are supreme, and they cannot be controlled by the constitutions and laws of the states. The Supreme Court also argued that (1) a power to create implies a power to preserve, (2) a power to destroy is hostile to and incompatible with the powers to create and preserve, and (3) where such a situation exists, the supreme authority must control. According to the Supreme Court, the states’ taxing power may be exercised to destroy, and it is subordinate to the U.S. Constitution. The Supreme Court also held that all subjects over which the sovereign power of a state extends are objects that the state may tax, but that a federal bank is not under the sovereignty of any individual state.