Double Taxation in Indian Country: Unpacking the Problem and Analyzing the Role of the Federal Government in Protecting Tribal Governmental Revenues

58 Pages Posted: 28 Aug 2007

See all articles by Mark J. Cowan

Mark J. Cowan

Boise State University -Department of Accountancy

Abstract

Businesses operating on Indian reservations may be subject to double taxation. Such double taxation results because, under Supreme Court jurisprudence, both states and tribes may validly impose taxes on non-tribal members doing business in Indian country. Indian tribes have long complained that the possibility of double taxation stifles economic activity on their reservations. This problem is particularly important today as Indian tribes look to expand their economies by seeking non-Indian businesses to come on to the reservation to assist in gaming, natural resource exploitation, or more traditional enterprises. This Article summarizes the genesis of the double tax problem and reviews which types of tribal economies are likely to be most affected. The problem is then unpacked by distinguishing the Indian double tax problem from other examples of double taxation that proliferate the economy. This analysis makes clear that double taxation in Indian country is similar to double taxation in international and multistate taxation settings, and therefore represents a deviation from normative tax policy. Finding that redress is necessary to restore horizontal equity and tax neutrality in tribal economies, the Article then reviews the efficacy of potential remedial measures, including the use of state-tribal tax compacts, the use of federal tax credits, and federal preemption of state taxation in Indian country. In reviewing the potential for preemption, the Article leverages off of research on federalism in state taxation in general. The Article concludes that a limited federal role—in preempting selected state taxes and encouraging tribes and states to negotiate fair tax compacts—should be considered in ameliorating the double tax problem, but suggests that any federal action should be guided by further research into the fairness of the tax compacting process itself.

Keywords: State Taxation, American Indian Law, Federalism

Suggested Citation

Cowan, Mark J., Double Taxation in Indian Country: Unpacking the Problem and Analyzing the Role of the Federal Government in Protecting Tribal Governmental Revenues. Pittsburgh Tax Review, Vol. 2, No. 2, 2005, Available at SSRN: https://ssrn.com/abstract=1009229

Mark J. Cowan (Contact Author)

Boise State University -Department of Accountancy ( email )

1910 University Drive
Boise, ID 83716
United States

HOME PAGE: http:///www.boisestate.edu/cobe-accountancy/department-of-accountancy/directory/mark_cowan/

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