Taxation in Indian Country
Taxation has been a frequent source of controversy between states and Indian tribes. Freedom of a sovereign government from taxation by another sovereign has been recognized as an important aspect of our federal system, 1 and this concept has been extended to activities of Indian tribes and members within their reservations. Indian reservations continue to be parts of the states in which they are located, however, so state sovereignty over the same geographic areas exists. State authority in this respect is particularly relevant when taxation of nonmembers for activities or transactions within Indian country is involved. The tension that exists when state and tribal sovereignty apply to the same parties and activities has given rise to considerable litigation over the last 30 years and continues to do so today. While that litigation has served to clarify many of the basic rules governing the respective powers of states and tribes, the proper application of those rules continues to challenge federal and state courts.
Indian tribes are governments that have long been recognized as possessing the power to impose taxes within their jurisdictions, although until recently this power was often unused. 2 In Washington v. Confederated Tribes of Colville Indian Reservation,3 the Supreme Court confirmed that a tribe's inherent authority to regulate activity occurring within the boundaries of its reservation was not limited solely to internal matters among tribal members, but that a tribe's inherent authority included the power to tax nonmember cigarette purchases from tribal vendors occurring on the reservation. The Court held that “[t]he power to tax transactions occurring on trust lands and significantly involving a tribe or its members is a fundamental attribute of____________________
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Publication information: Book title: American Indian Law Deskbook. Contributors: Hardy Myers - Author, Clay Smith - Editor. Publisher: University Press of Colorado. Place of publication: Boulder, CO. Publication year: 2004. Page number: 379.
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