MPR: Supreme Court to Hear Indian Tax Case

Supreme Court to Hear Indian Tax Case
By Dan Gunderson
February 12, 1998

Later this month the US Supreme Court will hear arguments in a Minnesota case that will affect local governments and Indian tribes nationwide. At issue is whether land owned by tribes can be taxed.

Steve Kuha: There's a map right here. The blue-green line - everything north of there is in the reservation boundaries.

ABOUT 40 PERCENT OF CASS COUNTY is north of the blue-green line, in the Leech Lake Indian Reservation. County Assessor Steve Kuha says about $3.5 million a year in property tax revenue now comes from that land, much of it owned by non-Indians. It's that money and potentially billions of tax dollars from land on reservations across the country that's at stake in the Supreme Court case.

Cass County Attorney Earl Moss says as the Leech Lake tribal government uses profits from its casinos to buy more land, the county faces a potentially significant loss of revenue.

Moss: Our concern is this. The tribe buys the land and leases it to individuals and it may not be taxable, or the tribe buys it and holds it and it's not taxable. What that will do is put a burden on the county into the future.

The tangled tale of Indian land ownership can be traced to the creation of Indian reservations when 19th century treaties between tribes and the federal government gave large areas of land to tribes.

Then much of the land was taken away during a period of time known as "allotment and assimilation." Starting in 1889, reservation land given to tribes was divided into parcels. Each Indian received a parcel of land. The rest was sold to non-Indians.

The pendulum began to swing the other direction in 1934, when the Indian Reorganization Act gave tribes self-determination and encouraged them to expand their land ownership. The act allowed tribes to purchase land and put it into trust with the specific provision trust land could not be taxed.

As has been the case with other tribal rights disputes, deciding the intent of the Congress that approved that 1934 document is at the heart of the case, and the two sides have very different interpretations.

Cass County attorney Earl Moss says the fact Congress allows Indian land to be held in trust, and thus not taxable, shows Congress clearly intended land taken out of trust should be taxable.

Moss: The government gave 'em options. Our position is: why would they have this trust status or option if we could not tax it merely by their reacquiring the land?

Tribal attorney Jim Schoessler says that's a back-door way of taxing Indian land. He will argue there is no congressional language that clearly says land owned by Indians within reservation boundaries is taxable.

Schoessler: The issue is going to be whether unmistakably clear congressional intent can be demonstrated by implication. If you say unmistakably clear intent can by demonstrated by implication it just doesn't make sense.

Schoessler says if the Supreme Court accepts the basic argument land owned by Indians and not held in trust should be taxed, large amounts of tribal land across the country will be taxable for the first time.

Schoessler: There's certainly a chilling effect toward purchasing land, especially land the surrounding non-Indian communities think is prime development land and therefore heavily taxable. There's a chilling effect if they know surrounding governments are going to tax them on it, and if the tax isn't paid, remove the land from tribal ownership again.

Tribal officials don't want to put land in trust essentially giving control to the federal government. They want to hold clear title to the land and use it for economic development. Leech Lake tribal chairman Eli Hunt says the case is about money and power. He says Indians are making money from casinos and using the money to buy land which is critical for tribes to strengthen and expand their economic base. He says counties fear the tribal expansion, and want to use taxation to stifle growth

Hunt: There isn't an Indian in this country who believes we were dealt with fairly when it comes to our land. I am angered by the threat that we would not be tax-free on land we purchased because I think it is our sovereign right to have tax-free land within our boundaries.

Attorneys for the tribe will also argue the Leech Lake Band of Chippewa is, through treaties with the United States, a sovereign government not subject to taxation by another government.

Cass County Attorney Earl Moss says tribal sovereignty is ill-defined. He says congressional action and changing tribal relations with the federal government over the years have created a legal morass that simply encourages conflict.

Moss: Hopefully this decision will put an end to some of the gray areas out there, and everybody will know where they stand. And regardless of the outcome, hopefully both sides will move on and accept the decision and it won't be one of those hot-button issues in the future.

The US Supreme Court is scheduled to hear the case February 24.

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