New York State: Deadliest Enemy of the Tribes

In 1886, the United States Supreme Court, in the U.S. v. Kagama case, noted that states were often the “deadliest enemies” of tribal governments. In modern times, however, as noted by Professor Matthew Fletcher:

States and tribes are beginning to smooth over the rough edges of federal Indian law – jurisdictional confusion, historical animosity between states and Indian tribes, competition between sovereigns for tax revenue, economic development opportunities, and regulatory authority – through cooperative agreements. In effect, a new political relationship is springing up all over the nation between states, local units of government, and Indian tribes

It is therefore unfortunate that the State of New York, and the City of New York, have shirked opportunities to cooperatively resolve tobacco taxation issues with their neighboring tribal governments. Instead, according to Indian Country Today:

The bloodiest battles of the decades-long cigarette tax war took place in 2010 when the federal and state governments passed crippling legislation against the tobacco economies of Indian nations. . . . In February, with New York state facing a $200 million deficit and pressure mounting from anti-Indian state legislators, then Gov. David Paterson, who had claimed respect for Indian sovereignty and the government-to-government relationship, instructed the state’s tax department to issue draft regulations on a new law to force the collection of state sales taxes on tobacco products sold in Indian country.

Sadly, leaders like Governor David Paterson and Mayor Michael Bloomberg, whose advice to the Governor was to "get yourself a cowboy hat and a shotgun" and enforce the state's new tribal tobacco tax laws, have caused state-tribal relations in New York to regress to where they were 125 years ago.

Hopefully incoming Governor Andrew Cuomo will seek out and seize collaborative opportunities to smooth out the edges of federal Indian law with his neighbor tribes, rather than allow New York to persist as the reborn deadliest enemy of tribal sovereignty.

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.

Tribal Members, Be Warned: The State Tax Man Cometh

Coverage of state budget crises like the New York Times editorial, "The Looming Crisis in the States" should serve as a warning to Indian Country. Observing that "[t]he most immediate cause of the states’ problems is the decline in tax revenue caused by the downturn," and citing a 10% decrease in state sales, personal and corporate taxes over the past two years, the Times recommends state tax increases, most notably income tax hikes. New personal or corporate taxes, or objects of such state taxes, are also in play. Tribal governments and Indian gaming proceeds are categorically immune from any state taxation under federal law. Notwithstanding, states like California are already seeking to tax Indian gaming revenues -- for example, once those monies trickle downstream to tribal members. Even though federal law also immunizes tribal members from state taxation, individual Indians, especially those living or doing business off-reservation, should expect to increasingly be the targets of state income tax assessors.

State tax assessors will tax Indians now, and sort out the legalities -- or illegalities -- later.

To preemptively frustrate any state's attempt to balance its budget on the backs of individual Indians, tribes and tribal members should aggressively engage in tribe-wide tax planning and if necessary, tax protest and litigation. Will your tribe be ready when the state tax man cometh?

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.