Which case established federal supremacy by upholding a national bank and denying states the power to tax it?

Which case established federal supremacy by upholding a national bank and denying states the power to tax it?

• A. The state can tax federal institutions freely.
• B. Federal supremacy by upholding a national bank and denying states the power to tax it.
• C. The constitution prohibits a national bank.
• D. States must cede all taxation authority to the federal government.

Answer: (B)

The main idea tested is federal supremacy and Congress’s implied powers under the Necessary and Proper Clause. In McCulloch v. Maryland, the Supreme Court held that Congress could establish a national bank through implied powers, even though such a bank isn’t explicitly listed in the Constitution. It also ruled that a state cannot tax that federal instrument, because allowing states to tax a federal entity would threaten federal authority—the power to tax would become the power to destroy. This relies on the Supremacy Clause, which makes federal law supreme over conflicting state laws. So the statement that best captures the case is that federal supremacy was established by upholding a national bank and denying states the power to tax it. Some options misstate the issue, such as suggesting states can tax federal institutions, claiming the Constitution prohibits a national bank, or asserting that states must cede all taxation authority to the federal government.

The main idea tested is federal supremacy and Congress’s implied powers under the Necessary and Proper Clause. In McCulloch v. Maryland, the Supreme Court held that Congress could establish a national bank through implied powers, even though such a bank isn’t explicitly listed in the Constitution. It also ruled that a state cannot tax that federal instrument, because allowing states to tax a federal entity would threaten federal authority—the power to tax would become the power to destroy. This relies on the Supremacy Clause, which makes federal law supreme over conflicting state laws. So the statement that best captures the case is that federal supremacy was established by upholding a national bank and denying states the power to tax it. Some options misstate the issue, such as suggesting states can tax federal institutions, claiming the Constitution prohibits a national bank, or asserting that states must cede all taxation authority to the federal government.