To [Congress'] enumeration of powers is added, that of making "all laws which shall be necessary and proper, for carrying into execution the foregoing powers, and all other powers vested by this constitution, in the government of the United States, or in any department thereof."
McColloch v. Maryland
Congress passed a law establishing a second national bank after the first one expired. Maryland did not want a national bank and so passed a law heavily taxing all nationally chartered banks doing business in the state when the Bank of the United States was the only such bank. McColloch, the treasurer of the Maryland branch of the federal bank refused to pay the tax and was prosecuted for tax evasion.
McColloch was convicted in the Maryland trial court.
Maryland's court of appeals affirmed.
Did Congress have the power to charter the Bank of the United States?
Was Maryland allowed to tax the Bank of the United States?
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Although this issue was not contested the first time Congress established a national bank, the Constitution does indeed not explicitly give Congress the enumerated power to establish a national bank. This was done under the Necessary and Proper Clause of Article I, Section 8 to fulfill multiple governmental objects, such as to lay and collect taxes, to borrow money, to regulate commerce, to declare and conduct a war, and to raise and support armies and navies. Maryland argues that the Necessary and Proper Clause is restrictive and merely limits Congress' enumerated powers to use where they are indispensable to carry out its enumerated powers.
However, this would greatly restrict Congress' power. No longer could it do what was best but only the very least needed to accomplish its objective. This would be unreasonable. It would imply that Congress could establish post offices and post-roads, but not employ mail carriers or punish those who steal mail. Congress could declare perjury in federal courts to be illegal but not set a punishment therefor.
More importantly, this would go against the intention behind the clause. In addition to the aforementioned unreasonableness, it is also placed next to other clauses that grant Congress powers, not limit them; and its terms purport to enlarge, not diminish its powers. If the Founders wanted this clause to limit Congress' powers, they would have said so clearly, like they did in many other places. While this power may have existed without its inclusion, the purpose of including it explicitly would seem to have been removing all doubts as to Congress' right to to legislate on its vast mass of incidental powers.
Maryland contends that there is no constitutional prohibition preventing it from exercising its taxing powers over the federal government and that the voters of the state should hold its legislature accountable and prevent it from using this power unreasonably. This is generally a suitable restraint to prevent a state from overtaxing its own citizens, but Maryland's actions would not only affect its own citizens, but those of every state, who cannot vote on the Maryland legislature.
The power to tax is the power to destroy. Allowing a subordinate to tax its sovereign would be incompatible with such roles. Taxation is only available to a sovereign. The people have given the United States taxing powers over them, not Maryland. States would not give each other the power to control their governments, so why should they each other the power to control the federal government to which they have confided their most important interests?
Conceding to Maryland's argument would completely change the governmental structure and make the federal government subservient to the states'. They could tax every function that it performs. And if they had power over the federal government, what would there be to restrain their use of this power?
No, states cannot tax or otherwise impede the lawful acts of the federal government.
Congress had the power to incorporate the Bank of the United States. Maryland's act voided. McColloch's conviction reversed and annulled.