McCulloch v. Maryland

Federal power to charter a national bank and state authority to tax federal banking operations.

Maryland imposed a tax on banks operating in the state that were not chartered by Maryland. James McCulloch, cashier of the Baltimore branch of the Second Bank of the United States, refused to pay the tax, and Maryland courts upheld the state's position that Congress lacked authority to create the bank.

The Court held that Congress had constitutional authority to create the Bank of the United States and that Maryland could not tax the federal bank.

Chief Justice Marshall reasoned that Congress possesses implied powers necessary and proper to carry out enumerated powers, including fiscal and monetary functions. The state tax was invalid because the power to tax could be used to control or destroy federal instrumentalities, which would invert the constitutional allocation of authority.

1. How does the allocation of regulatory authority affect coordination, expertise, and capture risk?
2. Which private or systemic risks remain outside the court’s doctrinal inquiry?