States have sufficient taxing authority already. As a result of recent Supreme Court decisions, states have the authority to collect tax on sales to non-Indians made on reservation land, but are not required to do so. Many states have worked out voluntary agreements with tribes for the collection of these taxes, while other states have waived their claim to collect these taxes in deference to tribal sovereignty. More than 200 tribal-state compacts in 18 states provide for tax collection and revenue sharing. Even without agreements, states have a variety of mechanisms available to them to ensure these sales taxes are collected, including collecting taxes at the wholesale, rack, or terminal level.
Dual taxation inhibits economic growth.
As sovereign governments, tribes can, and sometimes do, tax revenues generated within reservation boundaries. However, states are also allowed in some instances to tax revenues generated on reservations. Tribes are forced in these instances to choose between reducing tribal tax revenues or discouraging economic growth by double-taxing businesses. Reservations are among the poorest regions of the nation. Tribes should not have to choose between providing basic social services to their members and encouraging economic development to help relieve high unemployment and poverty rates.