The Supreme Court reviewed a tax issued by the state of Alabama on a federally incorporated insurance organization. The Court found that if a state had the power to levy a tax on a federally incorporated institution, then the state had the power to destroy the federal institution. This would make the states superior to the federal government. Hence, the Court held that Alabama's tax on the insurance organization was unconstitutional. Which of the following supports the act of the Court?

Question

Quizplus · Accepted Answer

Under the supremacy clause, courts may be called upon to decide if a state law is invalid because it conflicts with a federal law. In this case, when the Court found that if a state had the power to levy a tax on a federally incorporated institution; it realized that the state would have the power to destroy the federal institution. The Court realized that this would make the states superior to the federal government. The Court found that this would be inconsistent with the Supremacy Clause, which makes federal law superior to state law. Hence, the Court held that Alabama's tax on the insurance organization was unconstitutional.

The Supreme Court Reviewed a Tax Issued by the State