McCulloch v. Maryland

Note
I did most of this brief myself. Although I was able to correctly identify the second question in this case, I gave up on figuring out the holding and reasoning for that question. I found a nice brief by someone called CJ at the following URL: http://www.4lawschool.com/conlaw/mc.shtml, and summarized that material below. You will see a * next to that summary in my attempt to clearly show where my original thoughts begin and end.

On the one hand I'm slightly disappointed I couldn't do this myself. On the other hand, the rest of my brief looks pretty damn good. I wrote almost exactly what CJ wrote for the first half of my brief.

McCulloch v. Maryland, 17 U.S. 316 (1819)

Facts
Mr. McCulloch was a cashier at a Baltimore County branch of the Bank of the United States (not just a catchy name, it was a federal bank). He was sued by the state of Maryland because the bank failed to pay state taxes. The law in Maryland required all banks not chartered by the state to pay taxes on each transaction.

Questions
1. Is is constitutional for the federal government to incorporate banks?
2. Is it constitutional for state governments to tax federal agencies?

Holding
1. Yes
2. *No

Reasoning
1. In order to carry out it's duties the federal government can do anything it wants, as long as it is "necessary and proper". Federally incorporated banks are necessary to generate revenue. As far as I can tell, "proper" just means congruent with the rest of the Constitution.
2. *The federal government is supreme over the state goverment. States do not retain sovereignty over each other. State jurisdiction over the federal government would, in a sense, be the same as jurisdiction over all the other states.