The landmark Supreme Court decision in McCulloch v Maryland (1819) represented a significant expansion in the powers of the Federal government, in keeping with the Federalist tenor of the Marshall Court. In doing so, it dramatically shifted the balance of power between the Federal government and the states, in favor of the former.
The substantive issue at hand was whether the Constitution had given Congress the power to charter a bank. Federalists strongly believed that the establishment of a national banking system was an essential foundation for the United States' prosperity as a successful trading, commercial nation. Opponents, however, felt that such a measure would undermine the economic interests of agriculture, and place too much political and economic power in the hands of banking and commercial elites.
In giving its ruling, the Court held that the power to charter a bank was implied in the Constitution, even if not explicitly set out. This creative interpretation of the relevant constitutional provisions helped pave the way for other clauses of the Constitution to be construed in such a way as to validate the expansion of Federal power.
The second question decided by the Court was whether states had the right to levy taxes on banks or ban them altogether. The Court held that they did not. The Federal government had the right and the power to create Federal banks. Thus, the states were not entitled to tax the Federal government. For as Chief Justice Marshall himself stated "The power to tax involves the power to destroy." The Court believed that state governments should not be in a position to tax, and by extension potentially destroy, the Federal government.