Native Americans & Taxes
The truth about common mis-conceptions and stereostypes
March 8, 2005
By Jodi R. Rave
Native people endure some common stereotypes: Drunk, lazy Indians get a free education, free housing, and are free from paying taxes.
Indians are drunks? I've made a choice not to drink alcohol.
Indians are lazy? I go to work every day.
Indians get a free education? I have a $25,000-plus student loan debt.
Indians get free housing? I have a veteran's home mortgage.
Indians don't pay taxes? Each year I pay my fair share of state and federal taxes.
If you haven't heard any of these complaints, then you haven't been exposed to some common misconceptions about Native people.
Today, the last stereotype is standing front and center. It's tax season. And the e-mails sent to my account remind me about those who don't understand the tax system, Natives and Uncle Sam.
Far too many reporters neglect stories about Native communities, especially when the story moves into the complex political and economic arenas of Indian Country. It can be daunting — a bit like trying to find your way through a corn maze only to find it leads to another.
But like any long walk, it can be invigorating, even though it might take some work to get familiar with the pathways.
Let's take on the topic of how taxation applies to federal, state and tribal jurisdiction on Native lands.
A lack of understanding about taxation has led those who believe the stereotype to complain: "Those damn Indians should pay their fair share of taxes." It's a misconception that deserves further examination.
As individuals, we all pay federal income taxes. That includes Native people who live on reservations. That is a federal mandate without boundaries. When the April 15 federal tax deadline approaches, all Native people will be at the post office.
On the other hand, tribal citizens living on the reservation — on non-taxable trust lands — are not subject to local or state property and income taxes. That's because they fall under tribal jurisdiction, not the state.
It's a situation that causes some to feel "Indians aren't paying their fair share."
Yet, tribal governments could easily claim the same. That's because non-Native businesses and non-Natives living within reservation borders don't pay taxes to the tribes. That money goes to local and state governments.
Natives — both tribes and individuals — pay state and local property taxes within reservation boundaries if the land is not held in trust by the federal government. That leaves tribal governments with a weak to non-existent tax revenue base. The base is weak because 56 million acres — 45 million acres for tribes and 11 million acres for individuals — of Native-owned land is non-taxable because it's held in trust by the federal government through the Interior Department.
Tribes try to make up lost tax revenues by creating businesses, such as casinos. Those enterprises are no different than state-owned lotteries, which don't pay federal income taxes either.
This much should be clear: Native people are not free from paying taxes. The larger issue is a matter of who has the right to tax whom, which has created taxation quandaries that won't go away any time soon, even after the April 15 tax filing deadline. In fact, one of the ever-looming battles between states and tribes today centers on taxation disputes.
States with successful tribally-owned or tribal-citizen-owned businesses want to collect taxes from them. Topping their tax-wish list are tobacco and petroleum-related sales on reservation trust lands.
If just one reporter at every daily newspaper across the country wrote a Native tax-related story — and gave it jurisdictional context — that would mean some 1,456 stories might help inform the public about how Natives and tribal governments pay taxes, and why they don't.
After the tax stories, those same reporters might take on other Native stereotypes.
Meanwhile, I'll drink a Diet Coke, and keep coming to work so I can continue paying off my student loan and housing debt. And, of course, I'll be filing my taxes.
Jodi Rave reports on Native issues for Lee Enterprises.
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