Taxation: Going the way of the frog

Posted: March 03, 2005
by: Editors Report / Indian Country Today

Drop a frog in boiling water, he will jump right out; put him in tepid water and slowly add the boiling water and he will fall asleep, cooked to destruction.

Such could be the fate of Indian tribal sovereignty, if leaders let themselves be conditioned into a stupor when the spirited defense of their rights is paramount. It is not easy to sustain a firm and principled stance in facing off with the power of a state governor, or, harder still, the federal government.

While Congress cuts taxes nationally, mostly benefiting very high-income Americans and corporations, much of whatever needs to be done by government and social services continues to get done and someone has to pay for it. States and counties are feeling the pinch, property taxes are going up and up and suddenly the late good fortune of tribes, just in the cusp of gaining sustainable economies, becomes the target of plunder.

The sovereign status of Indian tribes in the United States represents inherent rights that predate the founding of the American republic. This is fact. The assertion of those rights by tribes has resounded with varying degrees of success in every decade of every century since then.

American Indian nations in their own territories, on their titled tribal lands or in trust status lands, have long been considered part of Indian country, that piece of the American landscape still under the control of governments with a sovereign status on a par - at the very least - with states within the federal umbrella.

As we all know, the late good fortune of tribes to launch and protect from taxation and undue regulation their own tribal enterprises is in the crosshairs of way too many governors as states seek to make up for huge state deficits caused by their own mismanagement and the downturn in federal dollars. The call for Indian tribal enterprises and businesses operated by individual tribal members thus becomes to pay ''their fair share'' of ''taxes'' to the coffers of their respective states.

This is the coming showdown in New York state, particularly over oil and tobacco products. Gov. George Pataki, after years of upholding his word to ''respect'' Indian sovereignty, has now moved to ''obey the law'' and is gearing up to crack down on Indian resistance to state taxation. Unrelentingly, the association of convenience store operators, along with state accountants, have been able to convince state elected officials that somehow the state was ''losing'' upwards of $300 million each year to this ''non-payment'' of taxes.

Any way you cut it, the definition is deceptive. By what formula must the tribes share a piece of their protected revenues without giving away their rightful ownership and legal protection as sovereign nations within their own jurisdictions? How can the state be ''losing'' something it does not own in the first place, namely, the tax base of another sovereign government?

It is a moment of truth in the question of taxation of Indian tribal and private reservation businesses. It is a major question of sovereignty, and tribe by tribe all have tested the waters of shifting definitions and terms to describe the bite that states seek always to take out of the fruits of Indian existence.

Taxation of Indian enterprises by the states cuts to the quick of the whole definition of sovereignty. Tribal people with strong governments and a cultured population have resisted imposed taxation with their bodies over barricades against the clubs and gasses of hundreds of state troopers. In 1997, two years after Governor George Pataki nearly launched an anti-Indian military plan known as ''Operation Gallant Piper,'' involving the massing of 10,000 troops, against Indian reservations, New York state's intention to tax Indian businesses caused a near rebellion state-wide. Led by the alliance of the two most populous tribes, the Seneca Nation of Indians and the St. Regis Mohawk, the grassroots rebellion ended in a stalemate with the state. For the new governor, it represented a lesson in tribal diplomacy and he certainly deepened his understanding for the intense opposition of the tribal base on this issue.

Eight years later, after constant lobbying by anti-tribal forces, unenforceable court decisions and several unsatisfying attempts to settle land claims under the carrot stick of casino giveaways in the New York region, Governor Pataki is back to his first move - to enforce a tax scheme that Indians throughout the past century have decried as unacceptable.

These taxes, if enforceable, represent the livelihood of hundreds of Indian reservation families that gain employment on their own tribal tax-sovereign territories.

Increasingly the pressure falls on Indian leaders seeking to protect tribal rights to self-determination and self-government. Some, like the Mohawks of Akwesasne, are in the thick of negotiating a land claim essentially linked to the go-ahead for a casino in the Catskills region. This would be a projected gold mine for the legendary nation of several thousand people, and Tribal Chief James Ransom is feeling the pressure of so many chiefs before him as the state turns up the heat on the waters toward that eventual day when taxation is acceptable to the Mohawk tribal government.

Turning up the heat in this case means fudging the wording from ''tax collection'' to ''trade agreement,'' intimating that the state may keep ''hands off'' and/or ''take into account'' the tribe's own existing regulations for licensing and taxing businesses on Mohawk land in the north. However, in order to qualify for a downstate casino, tribes will have to agree to collect and remit state and local taxes on sales to ''non-members of the tribe or nation'' on what will become Indian trust lands in the Catskills.

The Mohawks were told the state will ''take into account'' the tribes' own sovereign legislation governing such sales at Akwesasne. The ink was hardly dry on that concept, as Indian Country Today Associate Editor Jim Adams has written, when the governor broke his word and announced the writing of new regulations to force the collection of taxes on all Indian lands within the state of New York. Tribal and private member businesses are feeling the same pressure at Seneca Nation, Oneida Nation and at Tuscarora and Onondaga.

New York state Indian leaders need to get sensitive to the rising temperature in the water. Rather than constantly cut separate deals with the state in ways that will deaden their vitality to defend long-held tribal rights, they should consider a summit where the issues can be addressed. It is not too late for leadership to define their common concerns and the fundamental principles from which none will budge.

Perhaps this is only a pipe dream for the inheritors of the great Iroquois Confederacy in 2005, but the alternative is to swim in water that is quickly boiling and, like the frog, we know the stupor induced by cynical state negotiators can only lead to the destruction of Indian peoples. No self-respecting Haudenosaunee nation would ever agree to state taxation on any of its lands, anywhere.

Link to Report

March News

Last updated on March 05, 2005