The Supreme Court upheld Congress’s right to tax bank notes issued by a state-chartered bank.
In an effort to build revenue to finance the Civil War, in 1866 Congress passed an act that raised the tax on state bank notes from 1 percent to 10 percent. The Veazie Bank of Maine declined to pay the higher tax, arguing that it was an unconstitutional use of Congress’s power to tax because it was a direct tax and levied on a state agency. The Supreme Court, by a 7-2 vote, followed Hylton v. United States
Hylton v. United States
Marbury v. Madison
States’ rights and state sovereignty