If You Haven't Drank The Tribal Economic Diversification Kool-Aid, You Better Quickly Take A Sip

Indian gaming is the first tribal economy that has ever brought the type of non-Indian capital to Indian Country to make a meaningful difference in the lives of Reservation Indians. Today, however, Indian gaming is under it's most severe threat since states attempted to outlaw Indian gaming in the 1980s, prior to the Supreme Court's Cabazon decision. According to the New York Times today::

After shunning the concept for years, Massachusetts, seeking solutions to its budget woes, last fall became the first New England state to pass a broad law allowing resort casinos. Now others may not be far behind. . . . In New Hampshire, which dreads losing tourism money to Massachusetts, lawmakers are considering a bill that would allow up to four casinos there. Maine just granted its first casino license to a six-year-old Bangor slot parlor that will add table games next month, and a second casino is expected to open in Oxford this year. Both are the result of voter referendums. Rhode Island, which already has two slot parlors, will hold a referendum in November on whether to allow table games at one of them.

State-supported commercial, brick-and-mortar casinos are likely coming to a state, if not neighborhood, near you.

If that force weren't a threat enough to the Indian gaming industry, there is the December 23, 2011 decision to declare intrastate Internet gaming legal. The Las Vegas Sun headline, "DOJ opinion ‘important day’ in efforts to legalize online gaming," says it all.

It is widely believed that sooner or later the legalization of interstate iGaming will follow, meaning legalized Internet gaming throughout all of the United States.  Imagine Indian Country's best gaming patrons commencing play of Class III slot machines or other gaming devices on their laptop computers, from the comforts of their bedrooms and home offices.  That reality is in fact what is on the horizon.

Indeed, it is not a question of if the $26 billion tribal governmental gaming economy will recede as a result of mounting state and commercial gaming forces; it is a question of when -- and to what extent. So if you and your tribe aren't yet aggressively diversifying your  tribal economy away from sole reliance on gaming, what are you waiting for?

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  Gabe helps tribes and Indian small businesses with economic diversification efforts, with an emphasis on minimizing state interference or taxation. Gabe can be reached at 206.691.3631 or gabe@galandabroadman.com.

Amend IRA Section 17 To Allow Federal Incorporation For Tribal Members

Tribal entrepreneurs frequently have only one avenue to charter a business, be it a sole proprietorship, corporation or limited liability company: state incorporation. That is because many tribal governments still do not have business structures laws or incorporation regimes in place. The problem with state incorporation of a tribal member-owned business, though, is that a state charter is the first thing a state tax collector will cite when attempting to tax the business.  An Indian business' state incorporation should not matter. The U.S. Supreme Court has rejected the notion that state taxation arises from the form in which a tribal party chooses to conduct its business. Mescalero Apache Tribe v. Jones, 411 U.S. 145, 157 n.13 (1972). In Pourier v. South Dakota Dept. of Revenue, 658 N.W.2d 395, 405 (2003), a state supreme court explained:

Congress’ primary objective in Indian law for several decades has been to encourage tribal economic independence and development. By finding that incorporation under state law deprives a business of its Indian identity, we would force economic developers on reservations to forgo the benefits of incorporation in order to maintain their guaranteed protections under federal Indian law. This could hinder economic development.

State taxation or other regulation of tribal member businesses most certainly hinders -- it is in fact anathema to -- Indian economic development. Again, though, an Indian's state business charter becomes the proverbial Exhibit A in a state's case to tax or otherwise regulate the business.  In fact, it may be all a state tax collector needs to assess the Indian business, deferring the (il)legalities until later, meaning when the business will find itself enmeshed in a costly tax litigation battle.

Section 17 of the Indian Reorganization Act, 25 U.S.C. § 461 et seq. (1934), provides that “[t]he Secretary of the Interior may, upon petition by any tribe, issue a charter of incorporation to such tribe . . . .” 25 U.S.C. § 477. Although the title of the IRA states that the statute was intended “to extend to Indians the right to form business and other organizations” (48 Stat. 984), and Section 19 defines an “Indian” as “all persons of Indian descent who are members of any recognized tribe now under Federal jurisdiction" (25 U.S.C. § 479), Interior takes the position that Section 17 itself mandates that charters only be issued to a “tribe” and not any tribal member.

That position, though technically correct perhaps, is myopic. It remains Congress’ primary objective relative to Indian Country to encourage tribal economic independence and development (at least on paper). As such, the Obama Administration, especially given its current campaign to protect the American middle class, should support legislation that would allow tribal member entrepreneurs to incorporate, while maintaining their guaranteed protections under federal Indian law to be free of state interference.

A narrow amendment to Section 17 that would allow Indian persons to federally charter businesses in fulfillment of the law's expressed intent, rather than incorporate under state law and thereby risk destruction via state taxation and other regulation -- yes, certainly easier said than done in this political moment -- should be proposed by the Obama Administration and considered by the Congress.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com.

Tribal Media Outlets Post Gabe Galanda's "Attack on the Tribal Middle Class, Part III"

The Indian Country Today Media Network has published Part Three of Gabe Galanda's three-part series, "Attack on the Tribal Middle Class." The column was reposted by pechanga.net and Indianz.com.

Make no mistake, tribal sovereignty, and the vast economic benefit it brings to Indian and non-Indian America, is under siege. Non-tribal governments are once again speaking the language of assimilation and termination in an attempt to impede or extract value from any tribal economic endeavor that they perceive does not benefit the non-tribal middle class or private sector. Instead of brute physical force, they now deploy the power to tax, legislate, litigate and otherwise exploit sovereignty-based revenue from everything Indian Country and its tribal middle class have worked so hard to rebuild over the last 200 years.

Indian Country must now recognize this growing state and federal attack for what it is – an attack on Indian sovereignty. Then, only by taking preemptive legal and political steps to expose, confront and countervail those insurgent non-tribal forces that threaten American Indian economies, will we deter the termination of the new tribal middle class.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Part II of Seattle Native American Lawyer Gabe Galanda's Tribal Middle Class Series Published by Indian Country Today

The Indian Country Today Media Network has published Part Two of Gabe Galanda's three-part series, "Attack on the Tribal Middle Class."

Informed by federal “Indian self-determination” policy, in the 1970s Congress began enacting a slew of programs and laws committed to involving Indians in the development and implementation of reservation programs and services. As a result, the economic development of Indian Country finally commenced in earnest. The “distinct legal and economic market opportunities” derived from the “sovereign status of tribes,” as described by Drs. Joseph Kalt and Stephen Cornell, has since played the largest role in evolving the American Indian middle class discussed in Part I, into a reservation-based middle class—into a distinctly tribal middle class.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Gabe Galanda's "Attack on the Tribal Middle Class" Series Published by Indian Country Today

The Indian Country Today Media Network has published Part One of Gabe Galanda's three-part series, "Attack on the Tribal Middle Class."

No matter what the growing “Occupy Wall Street” movement seeks to accomplish, it has struck a nerve. Members of the American middle class are losing jobs, homes and savings because of the greed and carelessness of “too-big-to-fail” banks. Meanwhile “the country’s six largest financial institutions . . . now have amassed assets equal to more than 60% of our gross domestic product” (The Guardian). That wealth is not trickling down. According to a recent international study, the United States has the fourth highest income inequality rate per capita – trailing only Chile, Mexico and Turkey.

Make no mistake, the American middle class is hurting. Yet while the non-Indian middle class is at least being considered for U.S. governmental support, the tribal middle class – no stranger to the acute pains of economic recession or income inequality – faces rising attack by state and federal government.

Generally speaking, the middle class is comprised of persons with regular, formal employment, a salary and some benefits, and a reasonable amount of discretionary income – in other words, people who are not living hand-to-mouth. As one economist explains, the middle class are “people who are not resigned to a life of poverty, who are prepared to make sacrifices to create a better life for themselves but who have not started with life’s material problems solved because they have material assets to make their lives easy” (The Economist).

While innumerable Indians still live in abject poverty (despite Indian gaming), an increasing number of tribal citizens are now firmly part of the middle class as a result of hard work and sacrifice. This three-part series explores the tribal middle class, beginning below with a discussion of its genesis, which ironically was the result of federal policies that sought to destroy Indian America. Part Two will consider the emergence of a distinctly tribal middle class, including the tribal small business/private sector, as a consequence of Indian self-determination policy. Part Three will examine the rising national attack on the tribal middle class and how Indian Country might countervail that attack.

Gabriel "Gabe" Galanda is a partner at Galanda Broadman PLLC, of Seattle, an American Indian majority-owned law firm.  He is an enrolled member of the Round Valley Indian Tribes of Covelo, California.  He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.