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McCulloch v. M land, 17 U.S. 316 (1819)
Facts:
The United States Bank was rechartered by congressional legislation passed in
1816 after the original charter had been allowed to expire due to intense political
disagreement over the necessity and constitutionality of a national bank. The
Maryland state legislature passed a law requiring that all banks not chartered by
the state pay a 2% tax on the value of notes issued or a flat $15,000 fee per year.
Noncompliance with the state statute resulted in a $500.00 penalty per violation.
James McCulloch was the cashier at the Baltimore Maryland branch of the U.S.
Bank. He refused to pay the tax arguing that the state of Maryland had no
authority to tax the bank because it was a federal entity. The state of Maryland
contended that the charter of the U.S. Bank was an unconstitutional exercise of
power by the national government and the states retain the sovereign right of
taxation within their own geographic boundaries. Further