Stacy Leeds and Lonnie Beard on the Tax Implications of McGirt v. Oklahoma

Stacy Leeds and Lonnie Beard have posted “A Wealth of Sovereign Choices: Tax Implications of McGirt v. Oklahoma and the Promise of Tribal Economic Development,” forthcoming in the Tulsa Law Review, on SSRN. Here is the abstract:

Justice Neil Gorsuch’s now famous opening line in McGirt v. Oklahoma will long be remembered by Indigenous nations as one of the most powerful judicial statements in the history of federal Indian law. “On the far end of the Trail of Tears was a promise.”

For that promise to be fully realized, the McGirt decision must lead to more than just increased criminal justice system responsibilities for the federal government and the impacted Indigenous nations, collectively known as the “Five Tribes.” The promise at the end of the wholesale removal and relocation of Five Tribes was not simply an empty promise of geographic boundaries, it also included a permanent homeland with fully functioning tribal governments, including powers of taxation. With the re-affirmation of reservation boundaries and the re-assumption of many governmental responsibilities, the Five Tribes necessarily have the power to raise meaningful revenue to govern.

The promise must also include diverse economic development strategies conceived of and implemented by the Five Tribes in order to take advantage of and fully realize McGirt’s newly reaffirmed reservation status. If this challenge is accepted, the Five Tribes have an opportunity to reconfirm and expand government powers that have been denied them for over a century, including the power to make the same sovereign tax choices afforded other sovereigns worldwide.

This article explores the tax implications of the McGirt decision with detailed analysis of what has changed, and what remains the same, for purposes of federal, tribal and state taxing authority. The article suggests several law and policy choices available to the Five Tribes, including how to maximize tax incentives to grow the reservation population base and support a diverse economy through small business and enterprise scale development. The article includes a call to action for tribal governments to formulate a long-term economic strategy that will take advantage of tax attributes that attach to the various reservations. In conclusion, the article suggests possible compact arrangements with other Indigenous nations and with Oklahoma’s state and local governments.

McGirt has been heralded as ushering in substantial changes for the eastern half of Oklahoma. If tribes and Oklahoma play their collective economic cards right, big change could come in the form of positive economic outcomes. Economists predict, or at least hope for, a post-COVID economic revival for rural communities in America’s heartland. To assist in this economic revival, the Five Tribes’ reservations could serve as laboratories for the formulation of economic development strategies that could serve as blueprints for other parts of rural America. For that to happen in eastern Oklahoma, McGirt will need to live up to its full potential, becoming much more than an overturned criminal conviction from inside Indian country.