A number of tribes and states have reached intergovernmental agreements related to taxation. Tribes enjoy an exemption from state taxes, which provide many substantial economic opportunities not available to the other sovereigns within the American federalist structure. Many states, however, fear revenue loss as tribal enterprises begin to compete with non-Indian enterprises subject to state taxation. Thus, states resist the expansion of tax-exempt tribal enterprises when they can. Sometimes both parties perceive gain in reaching a negotiated resolution.
The State of Michigan and several tribes signed a broad taxation agreement that covers use taxes, fuel taxes, income taxes, tobacco taxes, and the Single Business Tax. This agreement provides for a standardization of tax collection understandings about the disbursement of a portion of tax monies back to the tribes and includes, under certain conditions, the waiver of sovereign immunity in tax matters for the tribes and the state.
In January 2002, the State of Nebraska and the Winnebago Tribe signed a taxation agreement governing the tribal sale of reformulated gasoline and other petroleum products, in which the tribe collects the state tax but receives 75% back from the state. In Oklahoma, more than thirty tribes have entered into agreements with the state governing the taxation of motor fuels in the wake of a similar act by the state legislature.
Tribal sales of tobacco often provide an attractive economic opportunity because, under most circumstances, tribes do not have the burden of state tobacco taxes. Many tribes and states, however, share concerns relating to the health consequences of tobacco and prevention of youth smoking. States are concerned about revenue loss as consumers shift from vendors subject to state taxes to the tribal providers. The State of Washington and its tribes have made several compacts relating to sharing revenues and managing the sale of cigarettes. In Oklahoma, the Choctaw, Chickasaw, and Seminole Nations also compacted with the State of Oklahoma regarding tribal sale of tobacco products. Per the agreements, the state receives tribal tax revenues but guarantees the tribes' taxation rates and contributions to certain programs, such as education and health care.
Race, Racism and the Law
Vernellia R. Randall
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