indian taxation

Angelique Eaglewoman: Tribal Values of Taxation within the Tribalist Economic Theory (SSRN)

Matthew L.M. Fletcher

Angelique Eaglewoman/Wambdi A. Wastewin of Hamline law has posted “Tribal Values of Taxation within the Tribalist Economic Theory” on SSRN. The paper is forthcoming from the Indigenous Nations Journal (KU).

From the Abstract:

Tribal governments in mid-North America exercise inherent sovereignty by imposing taxes within tribal territories. The recent history of commerce and commercial relationships is explored in this article along with the underlying cultural values that have guided economic relations. Taxation as a natural embodiment of tribal values of sharing and generosity fit within this tribalist economic theory. As Tribal Nations interacted with the newly formed settler government in this area, the United States, this new government sought to colonize tribal peoples, tribal resources, lands, and institutions. This colonial mentality continues to operate against Tribal Nations impeding and interfering with tribal resource management, resource utilization, taxation and the realization of prosperity. Recent developments in international indigenous human rights law support the assertion of full tribal sovereignty in the tribal territorial to the exclusion of the United States, including in the area of taxation. With this support in international law, Tribal Nations are able to continue to exercise economic development in harmony with the tribal values exemplified in the tribalist economic theory.

Tales from the Cert Pool: Justice Blackmun’s Papers on Cotton Petroleum

Matthew L.M. Fletcher1 Comment

Cotton Petroleum Corp. v. New Mexico is one of the harshest outcomes in the modern era of Indian law cases decided by the Supreme Court. In this case, the Court held that states may tax non-Indian-owned businesses doing business in Indian Country, even where the tribe has imposed its own tax. In short, the states may double-tax non-Indians, effectively preempting tribal taxes on the tribe’s own land.

The recent uploading of Justice Blackmun’s papers on the internet offers a glimpse into the background of the case.

In Cotton Petroleum, two documents are available: The cert pool memo and Justice Blackmun’s docket sheet recording the votes of the Justices.

The Court decided to grant certiorari in this case over the recommendation of the cert pool memo to deny cert. Justices White, Stevens, O’Connor, and Blackmun voted to grant cert (in accordance with the Rule of Four, only four votes are required to grant cert), while Rehnquist, Brennan, Marshall, Scalia, and Kennedy voted to deny.

One interesting (and awful) tidbit from the cert pool memo is that the memowriter noted that the tribal interests weren’t represented in the litigation and that, importantly, Cotton Petroleum hadn’t introduced evidence about the impact of New Mexico’s tax on tribal sovereignty:

“As [New Mexico] and [state] amici explain, this Court’s precedents require a showing of actual impact on tribal interests in self-government before pre-emption will be found, and [Cotton Petroleum] failed to introduce evidence of such impact in this case.” Cert Pool Memo at 7.

As noted above, the impact of New Mexico’s tax on tribal sovereignty was devastating, but since Cotton Petroleum was never in a position to make the argument, it was never developed.

Moreover, in a case denied cert that same Term, Rodney, Dickason v. Revenue Division of New Mexico, the cert pool memowriter (Deborah Malamud of NYU) argued that “the Indian preemption framework serves a substitute for the now-repudiated doctrine that state law has no effect on Indian reservations…. As that doctrine was geographical in nature, perhaps it makes sense that those same limits should apply to its modern substitute.” Cert Pool Memo in Rodney, Dickason at 8-9. But, alas, the Court decided not to adopt such a workable bright-line rule.

More tales from the cert pool memos will follow over the next several weeks.

A Judicial Framework for Applying Supreme Court Jurisprudence to the State Income Taxation of Indian Traders by Scott Taylor (St. Thomas)

Matthew L.M. Fletcher

Scott Taylor: A Judicial Framework for Applying Supreme Court Jurisprudence to the State Income Taxation of Indian Trader

From the abstract:

State income taxation of Indian traders is a legal issue that the United States Supreme Court is likely to address within the next five years. This article provides a theoretical framework for resolution of the issue by considering the political framework of the United States Constitution and the historical role that federally recognized Indian tribes have played within the American legal system. As the cases work their way through the state judicial systems, this article will provide an important theoretical starting point for the lawyers and judges dealing with the question. And when the United States Supreme Court finally addresses the issue, the Court will be able to consider the usefulness of my framework.

Virtually everyone who sells goods and services to one of the more than 560 federally recognized Indian tribes (or to their on-reservation members) is an Indian trader. Most Indian traders are in states that have an income tax. Although the United States Supreme Court has held that these sales are exempt from states sales taxes, no federal case has yet answered the income tax question. Tribes are interested in the issue because the outcome will affect their ability to tax Indian traders. States are interested because it will affect their tax revenue. Indian traders are interested because it will affect the state income taxes they pay.

The theoretical framework that I propose builds on some of the Supreme Court jurisprudence on federal Indian law. My framework looks at the structure of Congress, the inclusion of states, and the exclusion of tribes. Given Congress’ power over Indian affairs, the Supreme Court should decide cases in favor of the tribal interest whenever Congress has spoken with less than clarity. If states do not like the judicial answer, they can go to Congress and seek a legislative remedy, as they did with the Indian Gaming Regulatory Act in the 1980s.

Congress has regulated Indian traders for over 200 years but has never stated whether states can tax them. Given the presence of this federal regulation, the United States Supreme Court in the 1960s decided that states could not impose their sales taxes on Indian traders. In a line of subsequent Supreme Court cases, the federal preemption logic has remained largely unchanged. This same logic, when viewed in light of Congress’ role in Indian affairs and the political exclusion of tribes from Congress, leads to the conclusion that Indian traders should be exempt from state income taxes.