Taxation of Tribes by the States

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Taxation of Tribes by the States

• Outline of Presentation
• Quotes
• Overview of Government Taxes Today
• Indian tax law thesis
• Brief Tour Through Federal Indian Law Policy
• Historical Foundation - Treaties
• Express Implicit Subordination - Allotment
• Reorganization through Self-Determination
• Case Study and Conclusion

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State Taxation of Tribes - Quotes

• A nation cannot long exist without revenue.
  Destitute of this essential support, it must
  resign its independence . . . Federalist
  Papers, No. 12
• Whenever an Indian reservation has on it good
  land, or timber, or minerals the cupidity of the
  white man is excited, and a constant struggle is
  inaugurated to dispossess the Indian, in which
  the avarice and determination of the white men
  usually prevails. Indian Affairs Commissioner,
  Annual Report 1876

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Overview of Government Taxes

• Several levels of government exist today that
  provide services to meet public needs
• For the most part, each level independently
  assesses, enforces and collects taxes to yield
  public revenue
• Throughout history, government tax collections
  have risen and enhanced the presence and power of
  governments, national and local
• Thus, the wealth of many Americans depends on a
  relationship to government. The newly created
  forms of wealth (money, benefits, services,
  contracts, franchises and licenses, etc.) reduce
  individual autonomy in favor of governments as
  primary providers of services

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Federal, State Local Tax Revenues, 1800 - 2000
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Montana Tax Revenues Fiscal Years 2006-2009
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Montana Budget Summary

• The previous chart is 80 of MT revenue
• 20 remaining revenue (insurance premiums tax,
  coal severance - 10 million, 0.5, liquor taxes,
  tobacco taxes, etc.)
• 1.55 of revenue is from U.S. mineral royalties -
  29 million annually
• Total annual revenue 1.7 to 1.9 billion
• Property tax is largest revenue source
• Local govts/districts collect over 1 billion
  each year
• In last decade the average mill levy increased
  50
• Non-general fund revenue - 100s of millions
• State land trusts, tobacco settlement, coal
  trust, endowment funds, indemnity tax and trust,
  etc.

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Montana Government Budget FY09

• Legislative Branch leg services 5.9 m
• Judicial Branch - 34.3 m
• Governors Office - 6.24 m
• State Auditors Office - 16.9 m
• Dept. of Transportation - 531 m
• Dept. of Revenue - 54.5 m
• Dept. of Administration - 28.5 m
• Office of Public Defender - 19.2 m
• Public Health Human Services - 1.533 billion
• Dept. of Fish, Wildlife Parks - 68 m
• Dept. of Environmental Quality - 60 m
• Dept. of Livestock - 9.6 m
• Dept. of Natural Resources Conservation - 54.4
  m
• Dept. of Agriculture - 14.3 m
• Dept. of Commerce - 31.3 m
• Crime Control Division - 9.1 m
• Dept. of Justice - 71.8 m (motor vehicle
  division - 16.9 m)
• Dept. of Corrections - 177 m
• Dept. of Labor Industry - 69.5 m

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Public Perception Today Regarding Tribal
Governments Taxes

• In contrast, tribal governments are mired in tax
  litigation and adverse legislation
• Minimal collection historically, but growing
  today
• Despite potentially 5 concurrent taxes in Indian
  country, the majority of the American public
  many elected officials believe that Indians do
  not pay taxes
• Indian problem can be solved by denying special
  rights, discarding old treaties Indians
  paying their fair share become citizens

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Indian tax law thesis

• Since the founding of the republic, every
  generation of Americans and their elected
  officials, local and national, has debated who
  controls some form of wealth in Indian country,
  actual or potential
• An examination of these decisions confirms that
  Indian tax law is an efficient mechanism that
  invariably creates changes to the legal and
  political status of tribal governments and their
  citizens in order for other governments and their
  citizens to unjustly capture wealth derived from
  taxable activities in Indian country
• Consequently, tribes cannot achieve meaningful
  self-determination because they are not the
  primary governing entity, they are unable to
  address substandard socioeconomic conditions, and
  they are precluded from collecting public revenue
  to provide basic services

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Goal, Rights Duties

• R.M. Dworkin, Original Position (1973)
• . . . corresponding rights and duties are not
  correlative, but one is derivate from the other,
  and it makes a difference which is derivative
  from which
• Political theories will differ from another . .
  . Any particular theory will give ultimate pride
  of place to just one of these concepts it will
  take some overriding goal, or some set of
  fundamental rights, or some set of transcendent
  duties, as fundamental, and show other goals,
  rights, and duties as subordinate and derivate.

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Historical Cases Focus

• Treaties, Constitution, ICC and Treaty Clause
• Worcester v. Georgia (1832)
• the Cherokee nation . . . is a distinct
  community, occupying its own territory, with
  boundaries accurately described, in which the
  laws of Georgia can have no force, and which the
  citizens of Georgia have no right to enter but
  with the consent of the Cherokees themselves or
  in conformity with treaties and with the acts of
  Congress.
• Kansas Indians and New York Indians (1866)
• Federal Pre-emption Cherokee Tobacco (1871)

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Federal Indian Policy

• Colonial Period (1492 1776)
• Confederation Period (1776-1789)
• Trade Intercourse Acts / Treaties
• Marshall Trilogy (1789 1835)
• Removal Period / Treaties (1835 1861)
• Reservation Era / Implicit Subordination
• Civil War, Western Indian Wars (1861 1887)
• Allotment Assimilation (1871 1934)
• IRA, Termination Self-Determination (1934 -?)

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Indian Land Resource Ownership at Various
Periods
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Federal Indian Law, in Part, Applied to the Crow
Nation

• 1851 Treaty of Fort Laramie
• 1868 Treaty of Fort Laramie
• 1882 Agreement
• 1882 Northern Pacific Railroad Agreement
• Railroad Acts of 1887, 1888, 1889
• 1891 Agreement
• 1904 Agreement
• 1920 Crow Allotment Act
• Crow Nation v. United States (1935)
• Crow Tribe of Indians v. United States (1960)
• Crow Tribe v. Campbell Farming (1994)

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Modern Cases

• Williams v. Lee (1959) Infringement
• Warren Trading (1965), Bracker (1980)
• Moe v. Flathead (1976) - tobacco
• Colville (1980), Oklahoma and New York (90s)
• Motor Fuels Tax Cases
• Minerals Cotton Petroleum (1989)
• Montana (1981) civil jurisdiction
• Strate (1997) Rights of Way
• Atkinson (2001)
• Crow Tribe v. Montana I, II, III (1982 1998)
• Cotton Petroleum (1989) states and tribes
  severance tax
• Yakima (1992), Leech Lake (1998), Sherrill (2005)

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Judicial Termination During Indian
Self-Determination Era, 1970-Now

• Professor David Getches Review of USSC
• State government (and local government) interest
  generally prevail
• Minority rights are not protected
• Indian tribes viewed as another minority group
• Mainstream values are protected
• Public opinion has always impacted federal Indian
  policy however, the USSC historically upheld a
  modest degree of tribal sovereignty

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Conclusion

• Reform Indian tax law and reestablish tribes as
  the primary govt within Indian country
• End judicial termination USSC must follow
  constitution say what the law is not what it
  should be
• Educate elected officials about facts
• Proactively work with state local governments
• Create a level playing field for industry / small
  business to locate within reservation boundaries
• Regardless of business location, total taxes
  should be substantially similar whether on or off
  reservation
• E.g., tax credit with overlapping tax structures
• Montana budget surplus tax rebate for
  homeowners, tax cuts
• why are there minimal, if no, tax incentives for
  the poorest counties (reservations) in the state
  and nation?
• If Montana can tax non-Indians within the
  reservation, why doesnt the Crow Nation receive
  revenue created by Crow Indians taxable
  activities in Hardin and Billings?