In McCulloch v. Maryland, (1819), Chief Justice John Marshall stated (excerpt):
"Upon the supposition, that the bank is constitutionally created, this is the only question; and this question seems answered, as soon as it is stated. If the states may tax the bank, to what extent shall they tax it, and where shall they stop? An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation. A question of constitutional power can hardly be made to depend on a question of more or less. If the states may tax, they have no limit but their discretion; and the bank, therefore, must depend on the discretion of the state governments for its existence. This consequence is inevitable. The object in laying this tax, may have been revenue to the state. In the next case, the object may be to expel the bank from the state; but how is this object to be ascertained, or who is to judge of the motives of legislative acts?"
Marshall's point was that the State, which opposed the establishment of a national bank, if left unchecked by the federal government, had the ability to destroy the bank by taxing it out of existence.
Case Citation:
McCulloch v. Maryland, 17 US 316 (1819)
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In McCulloch v. Maryland, the United States Supreme Court declared that a state cannot tax a national bank. In explaining the decision, Chief Justice of the United States John Marshall declared that "the power to tax involves the power to destroy" meaning that if an individual state were allowed to tax a national bank, it could tax it so heavily that it would destroy it, and no individual state should have the power to destroy an institution that had been created by the U.S. government.
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The power to tax can be used to destroy or drive out a business by making the tax so high that the business is unprofitable.In the interest of public health, exactly that is now being done to the cigarette industry!It is the reason that religious activities and news publishing are not taxed, so that neither the states nor the federal government have that power over them.In the case of McCulloch v. Maryland, Chief Justice John Marshall said the power to tax is the power to destroy. A state could put the tax so high that the branch of the Federal Bank would not be able to continue doing business in that state. Since no state can interfere with a legitimate federal entity, Maryland was not entitled to tax the federal bank.
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The Supreme Court held that the Supremacy Clause (Article VI, Clause 2), which elevates federal law above state law when the two are in conflict (and do not involve a right explicitly reserved to the states) protected the bank from being taxed by the State(s). Chief Justice John Marshall declared the states couldn't tax the federal government.Case Citation:McCulloch v. Maryland, 17 US 316 (1819)