VideoCFO welcomes your letters. Send them to: The Editor, CFO, 253 Summer St., Boston, MA 02210
E-mail us at JuliaHomer@cfo.com, or contact a specific author by clicking on his or her byline. You can also post a comment directly on CFO.com by clicking on the appropriate link at the end of any article.
Please include your full name, title, company name, address, and telephone number. Letters are subject to editing for clarity and length.
Your recent article about Native American gaming ("The 5¢ Empire," December 2006) inaccurately portrayed the current law on taxation of "sovereign" Indian nations.
According to your article, "[Arnold] Schwarzenegger ran television advertisements portraying tribes as special-interest groups that avoided paying taxes. He was right; they don't pay taxes. Then again, neither does Belgium or any other sovereign nation." This passage gives an incomplete picture of the complicated issues related to the taxation of Native American businesses.
It is generally true that states do not have authority to tax or regulate gaming conducted on validly recognized reservation lands. However, the Indian Gaming Regulatory Act (IGRA) requires tribes wishing to pursue "Class III" gaming enterprises to enter into compacts with the state. These compacts will generally allow for some degree of state regulation and include an agreement for shared revenue generated by the gaming enterprise.
It should also be noted that other types of businesses conducted on tribal lands may be subject to state taxation. For example, both state and federal courts in many jurisdictions, including the U.S. Supreme Court, have consistently held that sales of tobacco to non-Natives can be subject to both state and local taxation. In fact, a federal court recently ruled that Rhode Island may even order state police to raid a Native American tobacco business on "sovereign land" in order to enforce state tax laws.
Furthermore, neither Indian tribes nor their members are immune from many forms of federal taxation. In general, Native Americans pay federal income tax on earnings from personal services or investments whether earned on or off the reservation, with the exception of income directly derived from allotted trust land, such as agricultural production. Native Americans also pay federal excise taxes.
Therefore, it is incorrect to assume that any state or local efforts to fairly tax Indian businesses are either unprecedented or wholly without merit. Similarly, your article fails to consider the potential deleterious effects of those gaming operations, both on and off the reservation. Off reservation, these facilities typically demand from the community as many, if not more, municipal services as taxed businesses, despite the fact that reservations are immune from property taxes. On reservation, experts have expressed concerns about gaming, including an increase in gambling abuse and addiction and evidence that gaming is replacing traditional social activities with materialism.
Indian tribes enjoy many benefits due to their "sovereign" status. Many of these benefits are an attempt to compensate for alleged unjust treatment of the tribes in the past. However, it would be a mistake to assume that these benefits are not without burdens, both for the Indian tribes and for the communities that host them.
Steven J. Getman
Seneca County (New York) Attorney
The Author Responds: I appreciate Mr. Getman taking the time to write to us about "The 5¢ Empire." I disagree, however, with several of the points in his letter.
First, I'm a bit baffled by the Seneca County Attorney's use of quotation marks around the term sovereign (when referring to native tribes as sovereign nations). The sovereign status of tribes is clearly stipulated in the Commerce Clause of the U.S. Constitution, which empowers Congress "to regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." At the very least, tribes enjoy status on a par with states. Moreover, they deal with the federal government on a nation-to-nation basis (hence the nearly 400 treaties signed by tribes and ratified by Congress in the 1800s).
While Native American sovereignty has eroded over time — mostly through legislation and court decisions shaped by bigoted, stereotypical views of Native Americans — the basic concept of Indian sovereignty has been repeatedly affirmed by the U.S. Supreme Court. That view was expressed early on in the landmark Worcester v. Georgia decision in 1832. Subsequent military defeats of native nations may have stripped them of tribal assets, but not of their sovereignty.
Mr. Getman is right in asserting that IGRA does allow for some degree of state regulation over Native American gaming operations. Our story says this. It also points out that this regulatory function was intended solely to make sure that native gambling operations were run on the up and up. IGRA also stipulates that a state's oversight role should be agreed upon in the compacting process. Such agreement includes any fees paid to the state to "defray" the cost of this oversight. But as our article indicates, IGRA prohibits states from demanding a piece of the action. Here's IGRA on that topic: "Nothing in this section shall be interpreted as conferring upon a State or any of its political subdivisions authority to impose any tax, fee, charge, or other assessment upon an Indian tribe...to engage in a Class III activity."
Reader Comments» Post a comment