The General Government, and the states, although both exist within the same territorial limits, are separate and distinct sovereignties, acting separately and independently of each other, within their respective spheres. The former, in its appropriate sphere, is supreme; but the states within the limits of their powers not granted, or, in the language of the 10th Amendment, "reserved", are as independent of the General Government as that government within its sphere is independent of the states.
[Footnote 1: The Collector v. Day, 11 Wall., 113, 124.]
It follows that the two governments, national and state, must each exercise its powers so as not to interfere with the free and full exercise by the other of its powers. To do otherwise would be contrary to the fundamental compact embodied in the Constitution—in other words, it would be unconstitutional.
This proposition was affirmed at an early day by Chief Justice John Marshall in the great case of McCulloch vs. The State of Maryland,[1] which involved the attempt of a state to tax the operations of a national bank. That case is one of the landmarks of American constitutional law. While it did not expressly decide that the Federal Government could not tax a state instrumentality but only the converse, i.e., that a state could not tax an instrumentality of the nation, the Court has held in many subsequent decisions that the proposition enunciated by the great Chief Justice works both ways. For example, it has declared that a state cannot tax the obligations of the United States because such a tax operates upon the power of the Federal Government to borrow money[2] and conversely, that Congress cannot tax the obligations of a state for the same reason;[3] that a state cannot tax the emoluments of an official of the United States[4] and conversely, that the United States cannot tax the salary of a state official;[5] that a state cannot impose a tax on the property or revenues of the United States[6] and conversely, that Congress cannot tax the property or revenues of a state or a municipality thereof.[7]
[Footnote 1: 4 Wheaton, 316.]
[Footnote 2: Weston v. City of Charleston, 2 Pet., 449.]
[Footnote 3: Mercantile Bank v. New York, 121 U.S., 138, 162.]
[Footnote 4: Dobbins v. Commissioner of Erie County, 16 Pet., 435.]
[Footnote 5: Collector v. Day, 11 Wall., 113.]
[Footnote 6: Van Brocklin v. Tennessee, 117 U.S., 151.]