In Tappan, Collector v. Merchants' National Bank, the Supreme Court of the United States was asked to decide whether the United States government had the right to collect taxes on the notes of a national bank. The case arose when the Collector of Internal Revenue attempted to collect taxes on the notes of the Merchants' National Bank of St. Louis. The bank argued that the notes were exempt from taxation under the National Bank Act of 1864. The Supreme Court held that the notes of the bank were not exempt from taxation. The Court reasoned that the National Bank Act did not provide an exemption from taxation, and that the notes were subject to taxation under the general laws of the United States. The Court also held that the notes were not exempt from taxation under the Constitution, as the Constitution does not provide an exemption from taxation for the notes of a national bank. The Court's decision in this case established that the notes of a national bank are subject to taxation under the general laws of the United States. This decision has been cited in numerous subsequent cases, and has been used to support the taxation of other types of financial instruments.

In the case of Tappan, Collector v. Merchants' National Bank, the Supreme Court was tasked with determining whether a tax imposed by Congress on national banks was constitutional or not. The majority opinion held that it was unconstitutional because it violated Article I Section 8 of the Constitution which grants Congress power to lay and collect taxes but does not grant them authority to impose direct taxes without apportionment among states according to their population. Justice Field dissented from this opinion arguing that since national banks are created under federal law they should be subject to taxation in order for Congress to have control over them and ensure their stability. He argued further that if such a tax is found unconstitutional then all other forms of taxation would also be considered invalid as well due to its similarity in nature and purpose with other types of taxation already accepted by courts as valid exercises of Congressional power.