McCulloch v. Maryland

McCulloch v. Maryland (1819) was a landmark decision by the Supreme Court of the United States. The US state of Maryland decided to tax all banknotes by banks not chartered by the state of Maryland. The only bank in Maryland at the time that did not have a state charter was the Second Bank of the United States. The bank was a branch of the federal bank established in 1816. 
Background.
The United States Constitution did not provide for judicial review of laws and court decisions. It was a power the US Supreme court assumed (took) for itself with its first landmark decision. In the decision "Marbury v. Madison" (1803) the court established its "power to say what the law is". The court gave itself the right to interpret the constitution.
In 1819 it was evident Maryland was targeting the US Bank. Most state banks resented the special privileges given to the US bank by Congress. The depression of 1818 was hurting state banks. The state charged a tax on the US Bank located in Baltimore. The branch manager was James McCulloch. He had refused to pay the state of Maryland $15,000 USD in taxes on the US Bank's currency. At that time states were battling with the Federal government over which had power over the other. Maryland sued James McCulloch. The state court upheld the decision he had to pay the tax. The court of appeals upheld the decision. McCulloch appealed to the U.S. Supreme Court in 1819.
The decision.
There were two questions the court needed to decide. Did Congress have the power to charter a federal bank? The next question was did Maryland have the right to tax a branch of the federal government. Was this constitutional? The court ruled that the federal government did have the power to set up a federal bank. Also, that a state did not have the right to tax the federal government.
Results of the decision.
For the Second Bank of the United States, the decision was short-lived. In 1828 Andrew Jackson was elected President of the United States. It was a victory for states' rights. Jackson vetoed the bill to recharter the bank. But the Civil war effectively ended states rights. The constitutional changes that followed favored a strong federal government. In the 20th century, "McCulloch v. Maryland" was the basis for the federal government being strongly involved in the economy. It set the legal precedent that the federal law was more important than state law in all matters.