Wagnon v. Prairie Band Potawatomi Nation: State Tax on Motor Fuels Distributed to Indian Tribal Retailers Page: 4 of 6
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tribes and their members are generally immune to state taxation unless Congress has
explicitly authorized the taxation.22 The Court has found state taxes inapplicable to on-
reservation sales to tribal members,23 but it has permitted state taxation of on-reservation
sales to nonmembers when the basic argument favoring federal preemption is merely that
the economic impact of the state tax renders tribal sellers unable to compete with off-
reservation vendors who charge only the state tax and not the additional tribal tax.24 If
the Court locates the legal incidence of a state tax with the non-Indian purchaser and finds
no explicit statutory preemption, it looks for implied preemption by examining the factual
circumstances and any federal statutory backdrop to determine whether there is a federal
preemptive interest in tribal self-government and economic development. It looks for
more than tribal sales that amount to marketing an exemption from state taxes and
encouraging nonmembers to flout their obligations to pay state taxes.25 The Court may
also frame its inquiry in terms of whether the state tax infringes on tribal self-
government.26 It may look to whether or not the state tax disturbs a market that is intrinsic
to the reservation, i.e., whether the state is attempting to tax a tribal product.27
State Taxation of Off-Reservation Tribal Activities. Off-reservation
activities of tribes are subject to state taxing authority. The leading case is Mescalero-
Apache Tribe v. Jones,28 in which the Court stated a standard: "[a]bsent express federal
law to the contrary, Indians going beyond reservation boundaries have generally been held
subject to nondiscriminatory state law otherwise applicable to all citizens of the State."29
nomembers as implicit in retained tribal sovereignty.
22 See, e.g., McClanahan v. Arizona State Tax Comm'n , 411 U.S. 164 (19783) (state net income
tax); Bryan v. Itasca County, 426 U.S. 373 (1976) (personal property tax); Moe v. Confederated
Salish & Kootenai Tribes, 425 U.S. 463 (1976) (on reservation retail cigarette sales to tribal
23 Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134 (1980).
24 Moe v. Confederated Salish and Kootenai Tribes, 425 U.S. 463 (1976); Washington v.
Confederated Tribes of the Colville Indian Reservation,, 447 U.S. 134 (1980); and, Department
of Taxation and Finance v. Milhelm Attea & Bros., Inc.,512 U.S. 61 (1994).
25 Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134, 155.
26 See Williams v. Lee, 358 U.S. 217 (1959).
27 The Court has said that "while the Tribes do have an interest in raising revenues for essential
governmental programs, that interest is strongest when the revenues are derived from value
generated on the reservation by activities involving the Tribes and when the taxpayer is the
recipient of tribal services. The State also has a legitimate governmental interest in raising
revenues, and that interest is likewise strongest when the tax is directed at off-reservation value
and when the taxpayer is the recipient of state services." Washington v. Confederated Tribes of
the Colville Indian Reservation, 447 U.S. 134, 156-157.
28 411 U.S. 145 (1973).
29 Id., at 148-149.
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Murphy, M. Maureen. Wagnon v. Prairie Band Potawatomi Nation: State Tax on Motor Fuels Distributed to Indian Tribal Retailers, report, December 9, 2005; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc822415/m1/4/: accessed January 16, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.