Could the state of Maryland put a tax on the National bank or did that tax violate the Supremacy Clause of the Constitution?
Asked by: Kathlyn Hermiston | Last update: February 10, 2026Score: 4.7/5 (28 votes)
Maryland could not tax the National Bank; the Supreme Court, in McCulloch v. Maryland (1819), ruled the tax unconstitutional, establishing that states cannot tax federal institutions because it violates the Supremacy Clause (Article VI) and the principle that "the power to tax involves the power to destroy," thus undermining federal authority. The decision affirmed Congress's implied power to create the bank (Necessary and Proper Clause) and affirmed federal supremacy over conflicting state laws.
Why can't Maryland tax the National Bank?
Maryland may not impose a tax on the bank. In a unanimous decision, the Court held that Congress had the power to incorporate the bank and that Maryland could not tax instruments of the national government employed in the execution of constitutional powers. Pursuant to the Necessary and Proper Clause (Art.
How was the Supremacy Clause applied to the Maryland tax on the National Bank?
Additionally, the Supremacy Clause in the Constitution makes federal laws supreme to state laws, and thus prohibits states from enacting laws contrary to federal laws. Consequently, Maryland's tax was unconstitutional.
What clause was used to justify Maryland's inability to tax the Second Bank of the United States?
Maryland, 17 U.S. 316 (1819) States cannot interfere with the federal government when it uses its implied powers under the Necessary and Proper Clause to further its express constitutional powers. The U.S. Congress created the Second Bank of the United States in 1816.
Why did Maryland want to tax the bank?
Maryland wanted to tax the Second Bank of the United States because they interpreted it as an infringement on their state's rights. However, the resulting Supreme Court decision reinforced federalism and that federal institutions could not be taxes by states.
Maryland could not tax instruments of the national government employed in the execution of
Why did they not want a national bank?
Not everyone agreed with Hamilton's plan. Thomas Jefferson was afraid that a national bank would create a financial monopoly that might undermine state banks and adopt policies that favored financiers and merchants, who tended to be creditors, over plantation owners and family farmers, who tended to be debtors.
What clause created the National bank?
Furthermore, Hamilton, unlike Jefferson, loosely interpreted the “necessary and proper” clause of Article 1, Section 8 of the Constitution to permit Congress to enact legislation for a national bank.
Why didn't Maryland's state banks like the Bank of the United States?
Maryland's state banks weren't very happy about having a new competitor in town where people could do their banking. And they didn't like that the Bank of the U.S. had a privileged relationship with the U.S. government.
What clause in the Constitution was used to justify the Bank of the United States?
The Elastic Clause was used to justify the creation of a national bank, which would be challenged and then upheld in McCollough v. Maryland. The Elastic Clause appears in Article I, Section 8 of the United States Constitution, allowing Congress to make laws not specifically mentioned in the Constitution.
How did the state of Maryland try to take action against the Second Bank of the United States?
Many states questioned the constitutionality of the national bank, and Maryland set a precedent by requiring taxes on all banks not chartered by the state. In 1818 the State of Maryland approved legislation to impose taxes on the Second National Bank chartered by Congress.
What was the main argument against creating a national bank?
Jefferson argued that the creation of a national bank was not a power granted under the enumerated powers, nor was it necessary and proper. Both gentlemen presented their arguments to Washington, and ultimately Washington agreed with Hamilton.
What does the national Supremacy Clause mean?
Established under Article VI, Paragraph 2 of the U.S. Constitution, the Supremacy Clause enables the federal government to enforce treaties, create a central bank, and enact legislation without interference from the states.
How did the Supreme Court justify its ruling in favor of the Second Bank of the United States?
The establishment of the Second Bank of the United States was thus ''necessary and proper'' for the federal government to fulfill its expressed duties in the Constitution. The Supreme Court also ruled that taxation by a state on a federal bank would diminish or destroy the effectiveness of the national bank.
What was the legal argument in McCulloch v. Maryland against the federal government establishing a national bank Quizlet?
Correct - That was the main claim argued by Maryland. They argued that the power to charter a National bank was not found in the Constitution because it did not belong to the enumerated powers of the Congress as stated in Article One.
Can the government tax your bank account?
Yes, the IRS can levy funds from both checking and savings accounts. No account type is exempt.
Does the U.S. government have the power to create a national bank?
Congress established the First Bank of United States in 1791, but it let its charter expire in 1811. Congress then established the Second Bank of United States in 1816. The Marshall Court finally upheld Congress's power to establish a national bank in the landmark decision, McCulloch v.
What president wanted to get rid of the National Bank?
The Bank's most powerful enemy was President Andrew Jackson. In 1832 Senator Henry Clay, Jackson's opponent in the Presidential election of that year, proposed rechartering the Bank early.
Why did Maryland tax the National Bank?
Many states opposed the National Bank because the state banks then had to compete for business. In response, Maryland passed a law requiring the national bank to pay a heavy tax to the state of Maryland. James McCulloch, the bank's cashier, refused to pay the tax.
Why is a national bank unconstitutional?
The Bottom Line. Some people argue that the Federal Reserve is unconstitutional because they believe the Constitution does not grant the federal government the authority to create a central banking system.
Which president hated the National Bank?
Jackson disliked the Bank for two main reasons: He believed it was too powerful and took authority away from the states. He thought it favored wealthy bankers instead of regular citizens.
Why did James McCulloch refuse to pay taxes?
James W. McCulloch, the head cashier at branch in Baltimore, refused to pay $15,000 in owed taxes, claiming Maryland's government didn't have the right to tax a federally chartered bank. Maryland's leaders sued and the state's courts sided with the legislators.
Why did the state banks hate the National Bank?
State banks opposed recharter of the national bank because when state bank notes were deposited with the First Bank of the United States, the Bank would present these notes to state banks and demand gold in exchange, which limited the state banks' ability to issue notes and maintain adequate reserves of specie, or hard ...
What does article 7 of the US Constitution say?
Article VII of the U.S. Constitution is about the ratification process, stating that nine of the thirteen states needed to approve it through special state conventions for the Constitution to become the law of the land, replacing the Articles of Confederation. It established the conditions for the new government to take effect and included the date the Constitution was signed (September 17, 1787).
What does article 1 section 10 clause 3 of the Constitution mean?
No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.
What did Thomas Jefferson say about the national bank?
He who erects a bank, creates a subject of commerce in its bills, so does he who makes a bushel of wheat, or digs a dollar out of the mines; yet neither of these persons regulates commerce thereby. To make a thing which may be bought and sold, is not to prescribe regulations for buying and selling.