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Myths About Indians

Indians don’t pay taxes

In ordinary affairs as a U.S. citizen, Indians pay taxes. However, when tribes reserved lands and property in treaties, the U.S. often promised that Indians would not have to pay taxes on revenue generated from land held “in trust.” This is generally true today. This means that tribes and individuals Indians do not pay income taxes to the federal government on sale or lease of land, resources, livestock and agricultural products generated from trust land. Tribal government employees and members generally, however, do pay taxes like anyone else to both the federal government and the states.

• Taxes to states. This is one area where certain states (like Arizona, New Mexico and Oklahoma) have been vigilant about trying to generate revenue. They do so despite the fact that federal government has recognized that federal lands (including Indian property) can’t be taxed and has provided payments to cities, counties and states to off-set the lost tax revenues. [These are called “impact aid funds”—the same kind of monies paid to state and local governments with military bases. The federal government also offers these communities special federal education funds, and makes available to businesses federal tax credits and accelerated depreciation.] Many state governments refuse to acknowledge these federal payments and seek double income by taxing the tribes and their members in “Indian country,” even though the U.S. keeps telling the states that they have no jurisdiction. As a result, many states waste tax dollars pursuing such litigation. Economically it doesn’t make sense for another reason. Tribal economies are very fragile. When they have been forced to pay taxes (for example the Menominees of Wisconsin in the 1950’s), the tribe faces economic disaster and can no longer provide for its members creating financial liability for local and state governments.)

• Taxes to tribes. Like other governments, many tribes levy taxes on sales of goods and services. They use this revenue to support the operation of government, including the provision of essential services and the construction and maintenance of roads. Many states and individuals, however, seem to want to prevent tribes from being able to generate money through taxes and want tribes to remain poor. Actually, it is better for all if Indian tribal governments can meet the needs of their own communities rather than having to rely on non-Indian jurisdictions for such support. State governments do not benefit by maintaining Indian communities as pockets of poverty.

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