Wall Street Journal Exposes State-Big Tobacco Scheme to Snuff Out Tribal Tobacco Economies

It has been no secret that the states and Big Tobacco are in cahoots to destroy tribal tobacco economies (see the 1998 MSA), but the lengths to which they would go to do so, was left to speculation. Now, the Wall Street Journal has blown the cover off dealings between the States and Big Tobacco, which, as with the original MSA negotiations, concern tribal tobacco economics but do not involve any tribal governments. Nor can there be any doubt whatsoever that state governments are actively looking to balance their hundred-plus-million-dollar budget deficit on the backs of Indians.

The MSA is a convoluted mess, as the states would agree, but the upshot of the unholy alliance between them and Big Tobacco relatively straightforward: States pledge MSA monies to back bonds they issue to fund state government, especially while state tax revenues are at an all time low. In exchange for MSA monies paid by Big Tobacco, the states must protect Big Tobacco's multi-billion dollar market share, including in Indian Country.

Big Tobacco complains that tribal tobacco manufacturers and retailers are eating into that market share. So Big Tobacco threaten the states.

Unless the states more rigorously enforce state tobacco tax laws in Indian Country, Big Tobacco will take the MSA monies back, through push or shove, which could cause the state MSA-backed bonds to default. The States literally cannot afford a default so they are forced to cut a deal with Big Tobacco, promising to do more to protect Philip Morris and Friends' market share, with the tribal tobacco economy being the bargaining chip that both parties are all to happy to cede.

If, or when, the deal currently being negotiated between the states and Big Tobacco is consummated, it could result in the biggest heist of tax value derived from Indian Country by state government and non-Indians, since the Dawes Act. And the model state tobacco tax laws contemplated by the agreement, when, not if, passed by state legislatures, would cause massive, further incursion of state civil regulatory authority into Indian Country.

Indian Country -- meaning not just tribal governments with tobacco economies -- unite! And take action to defend tribal sovereignty as we now know it.

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.

Trahant Reports Quotes from Galanda Broadman's Blog on Indian Tax

Gabe Galanda's blogs on Indan taxation are quoted in Trahant Reports, as featured on indianz.com: It's time for tribes and states to work together.

Seattle attorney Gabriel Galanda puts it this way, on the social network, LinkedIn: “Tax-starved states and counties will continue to attempt to extract value from reservation economic development projects, through taxation or otherwise. Tribes must be vigilant in their defense against illegal inter-local cash grabs.”

On Galanda’s blog he writes that Washington state Republicans are proposing to “close” tribal tax loopholes worth $110 million. His message is clear. “Make no mistake about it,” he writes, “the state tax man cometh to Indian Country. Be prepared.”

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.

Has California Consulted With Tribes Regarding MPLA Closures?

California tribal members gathered to protest proposed MLPA closures on June 18, and they will raise their concerns at the California Fish & Game Commission (CFGC) meeting in Stockton on June 29-30. But has the CFGC consulted with California tribes regarding proposed restrictions on coastal gathering proposed under the Marine Life Protection Act (MLPA) Initiative? Make no mistake, even though California tribes' treaties weren't ratified, the state of California still must consult with those tribes regarding state laws and policies that will detrimentally impact the tribal religious, cultural and subsistence practices of gathering food from the sea.

Government-to-government consultation is a fundamental aspect and necessary component of tribal sovereignty that has never been extinguished – explicitly or implicitly – by the federal government. California tribes should demand consultation from CFGC regarding the proposed coastal gathering restrictions, to the extent the state has not yet provided that opportunity to affected tribes.

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 Economic Diversification: It's Happening

In line with business advice delivered by Gabe Galanda at RES 2011, about why tribes should diversify their economies, and precisely how they can attract private developers and investors to tribal lands, the Coquille Tribe of Oregon has attracted a Perpetua Power Source Technologies manufacturing facility to its reservation. Read the story: "Tribal money fuels Perpetua expansion." 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.

Setting the Record Straight on Indian Taxation in Washington

Late this week, Washington State Republicans introduced three bills, seeking to balance the state's budget on the backs of Washington's 29 tribal governments. A legal and economic reality check is in order. Those bills are:

HB 2044 Concerning equity and fairness through the creation and regulation of electronic scratch ticket machines for nontribal gambling establishments.

HB 2045 Providing for fairness, equity, and transparency of tax preferences for federally recognized Indian tribes.

HB 2046 Concerning legislative involvement with compacts and compact amendments.

In support of those bills, Republican House members argue for "closing tribal tax loopholes." Here are some of the facts the Republicans either (a) do not understand, (b) do not care to understand, or (c) understand but do not care to help the public understand.

1. State taxation of Indian gaming revenues has been per se barred by Congress via the Indian Gaming Regulatory Act of 1988. Period. Still, local Republicans aspire to require "the non-taxpaying tribal mega casinos to pay a tax on the profits they make from the exclusive games they operate." Until they can figure out a way to do that (they can't), they hope to allow the largest expansion of gaming in the state's history, over-promising new state tax revenues. Indeed, according to a commercial gaming industry expert, the proposal "would cut into sales tax revenues in other segments of the state economy."

2. Governments don't tax other governments. Instead, governments -- be they state, local or tribal -- work with each other to devise accords that reflect the needs of each government in relation to the services they provide the public. That is why, according to one study, “[n]early every state that has Indian lands within its borders has reached some type of tax agreement with the tribes” -- including Washington.

3. State and local governments are already adequately compensated for the services they provide to tribal members. Under the economics of “tax exporting,” it is frequently tribal governments – not state or local governments –- who bear a disproportionate financial burden associated with the services they provide.

4. Washington State cannot legally enforce its fuel and tobacco excise tax regime on Indian reservations, according to the U.S. Supreme Court. Washington v. Confederated Tribes of Colville Indian Reservation, 447 U.S. 134, 162 (1980); Oklahoma Tax Commission v. Potawatomi Tribe, 498 U.S. 505, 514 (1991). Therefore, heeding advice from the High Court, the state has entered into fuel and tobacco tax compacts with tribes, in part so it can collect something from reservation-based fuel and tobacco sales, instead of engaging zero-sum litigation and enforcement activities.

5. Ten years ago, researchers at the Evergreen State College opined that Washington tribal governments contributed an estimated $140 million annually to the state and local tax structure. Today tribal tax contributions to the state are likely far greater, due in large part to the diversification of Washington tribal economies beyond gaming and tobacco commerce. Tribes are already contributing their so-called fair share of taxes.

One can only hope that the facts will enter the legislative discourse about HB 2044, 2045 and 2046.

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. Gabe co-authored "Taxing Times in Native America," Washington State Bar News, January 2011. He can be reached at 206.691.3631 or gabe@galandabroadman.com, or via galandabroadman.com.

Balancing State Budgets on the Backs of Indians

The $175 billion state budget shortfall can "be traced to 15 years of state tax cuts," and red states, especially, continue to slash corporate income taxes. Meanwhile, Washington State Republicans propose closing "tribal tax loopholes" to supposedly earn the state $110 million every biennium, to be used for "education, public safety and services for the most vulnerable."

So let me get this straight: states continue to cut taxes on Corporate America through "thousands of credits, deductions, abatements and incentive packages," which guts revenues for state services; while proposing to close "tax loopholes" for tribal enterprises, which would gut revenues for tribal governmental services.

Make no mistake about it, the state tax man cometh to Indian Country. Be prepared.

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.

Fox News' John Stossel Doesn't Know Jack About American Indians

Gabe Galanda is quoted at length in an Indian Country Today Media Network story about ignorant remarks that Fox News contributor John Stosell made about American Indians last week on live TV.

Gabe Galanda, an enrolled member of the Round Valley Indian Tribes and an Indian law attorney said Stossel’s lumping together of Indians, Puerto Ricans, African Americans and Irish reveals a lack of knowledge about the sovereignty of Indian nations.

“Stossel, like many Americans, fails to fundamentally appreciate that tribes are governments, not ‘groups’ of individuals as he says,” he said, pointing that American Indians are the only Americans who are indigenous to the United States and the only peoples to whom the U.S. owes a trust responsibility.

“The United States has historically done a disservice to Native Americans, by and through genocidal and assimilationist federal policies. As a result of federal allotment, assimilation and termination policies, which remain in force to this day despite Congress’ repudiation of those policies, some tribal communities are in fact worse off socio-economically than most other American citizens,” Galanda said.

In mocking Indians’ assertions about broken treaties and stolen land, Stossel shifts from speaking in the Indian voice when he says “we have treaties,” to speaking in the settler colonist’s voice when he says “we stole their land,” but it isn’t evidence of an identity crisis on Stossel’s part, Galanda said. “He’s confused. On the one hand, he recognizes the existence of Indian Treaties, bilateral agreements between sovereign nations, namely the United States and tribal governments; yet on the other, he refers to Indians essentially as special interest citizen groups.”

Despite hundreds of years of trust obligation to Indian people, the federal government has failed in virtually every attempt to ‘help’ Indians, Galanda said. With the exception of the last forty years of federal self-determination policy, federal Indian gaming, and contract preference policies in particular, the U.S. has failed in every effort to economically enfranchise Indian country, he said.

It's one thing to comfortably espouse right wing vitriol from republican pulpit Fox News. It's another to contribute "news" without having any idea what you are talking about.

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.

Seneca Nation Leverages Tribal Sovereign Economic Advantages to Woo Corporate America to Tribal Lands

True to business advice delivered by Gabe Galanda on March 15 at RES 2011, the Seneca Nation is inviting Corporate giants like Verizon to greenfield new operations centers on Seneca tribal lands. According to an Indian Country Today Media Network story, "Seneca Offers Land, Tax Advantages, Expertise to Verizon":

Seneca President Robert Odawi Porter wrote to Ivan G. Seidenberg, chairman and CEO of Verizon, on March 18 urging him to consider the many advantages of Seneca Nation land for future Verizon development. . . .

[T]he Seneca Nation doesn’t suffer from the same “systemic impediments” as New York’s local and county governments and invited him to visit Seneca territory to see for himself. The nation, Porter said, supports business development on its territories and throughout Western New York. . . .

Businesses that develop facilities on sovereign Indian land enjoy a number of competitive advantages, Porter said, listing a number of them:

- The Seneca Nation has civil regulatory authority over its own territory, meaning development on Seneca lands would not be subject to New York and county regulatory regimes so that projects can move forward more quickly than on non-Indian land. - Seneca has “streamlined processes” over the tens of thousands of acres of its territory in Western New York. As a result, companies who locate businesses on Seneca land won’t face “nuisance litigation from neighboring landowners as Verizon did," Porter said. - Businesses that locate on Indian land also have certain tax advantages, including in Seneca’s case, no property taxes. “As a sovereign nation, we control our own tax regimes. Culturally, we do not believe in imposing business-choking taxes on our people and development partners. As a result, your facility would not be subject to property taxes on our lands,” Port told the Verizon CEO. The IRS also allows third-party businesses on Indian land to use a shorter depreciation recovery period of approximately 40 percent for most non-residential depreciable property used in development.

Bravo, Seneca Nation, bravo!

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.

"Dueling Sovereigns: Collecting Taxes in Indian Country"

Gabe Galanda and Anthony Broadman will be co-presenting, "Dueling Sovereigns: Collecting Taxes in Indian Country," at the 25th Annual Coming Together of Peoples Conference at the University of Wisconsin Law School on March 25, 2011.

State and tribal regulations arguably come into the most direct conflict at tax time. Efforts to streamline the federal tax code could lead the IRS to treat tribes more similarly to states, and some states would like to implement on-reservation sales taxes to ease their budget crises. What case can be made for the interests of each sovereign, and who has been winning when they collide?

Gabriel "Gabe" Galanda and Anthony Broadman are partners at Galanda Broadman PLLC, an American Indian majority-owned law firm. Gabe 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. Anthony can be reached at 206.691.3631 or anthony@galandabroadman.com.

The Business Case for Private Investment and Development in Indian Country

On Wednesday, at RES 2011 in Las Vegas, Gabe Galanda presented a paper titled, "The Business Case for Private Investment and Development in Indian Country" (updated March 31, 2011). The paper was commissioned by the U.S. Interior Department's Office of Indian Energy and Economic Development, for presentation to representatives of Corporate America in attendance at RES.

There has never before been a better time to develop businesses on Indian lands or otherwise in partnership with tribal governments. The Great Recession has taken a disastrous toll on state and local governments. State tax revenues have plummeted, causing state and local governments to cut programs and reduce workforces. Local development impact fees have spiked. Tax assessors are assessing property and excise taxes with reckless abandon, as many state legislatures having withdrawn various tax exemptions and incentives that were designed to catalyze local business development and job creation. Obtaining building permits now takes even longer. It is getting more and more difficult, if not impossible in some jurisdictions, to develop new businesses in traditional commercial sectors.

But while state and local governments struggle to make ends meet, tribal governments have largely avoided economic catastrophe. Fueled by the $26.4 billion Indian gaming industry, Indian Country is generally faring much better than neighboring local economies since the recession took hold in 2008. Ironically, not having property tax bases to begin with, most tribal governmental revenues have remained stable. But tribes are not getting complacent; they recognize that the Indian gaming industry will not sustain its exponential growth over the last decade. The inevitable legalization of Internet gaming and, in some jurisdictions, commercial land-based gaming, will eventually put a major dent in Indian Country’s bottom line. As such, tribal governments are more than ever looking to diversify their economies.

Where tribes bring a staggering array tangibles like land and location, and intangibles like sovereignty, relaxed red tape and tax exemption, their corporate business partners bring proven industry expertise and new capital to the reservation. Whether through a joint venture between a tribe and a non-Indian business, a tribal land lease to a non-tribal company, or a tax credit investment – all of which are contemplated below – there are an abundance of very advantageous reservation development deals for Corporate America to symbiotically explore with tribes at this time in our nation’s history.

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.