A Wealth of Sovereign Choices: Tax Implications of McGirt v. Oklahoma and the Promise of Tribal Economic Development

Justice Neil Gorsuch’s now famous opening line in McGirt v. Oklahoma will long be remembered by Indigenous Nations as one of the most powerful judicial statements in the history of federal Indian law: “On the far end of the Trail of Tears was a promise.” McGirt is a landmark United States Supreme Court decision that rejects Oklahoma’s century-long presumption that no Indian reservations remained in present-day Oklahoma. Acting on that presumption, Oklahoma had long exercised civil and criminal jurisdiction over most of the State, including Indians and non-Indians alike. In reaffirming the reservation boundaries of the Muscogee (Creek) Nation, the Court rejected Oklahoma’s exercise of criminal jurisdiction over a major crime committed by an Indian within Indian country. The implications of the McGirt decision are potentially far-reaching and will likely extend to both criminal and civil jurisdiction of federal, state, local, and tribal governments. The reaffirmed reservations of the similarly situated “Five Tribes” collectively span half of the state of Oklahoma. This article explores one aspect of the potential civil jurisdictional implications of McGirt: the sovereign power of taxation. We include a detailed analysis of what has changed, and what remains the same for purposes of federal, tribal, state, and local taxing authority. McGirt is heralded as ushering in substantial changes for the eastern half of Oklahoma. However, in order for the Five Tribes to fully realize all treaty-based promises, the McGirt decision must lead to more than just increased criminal justice system responsibilities for the federal and tribal governments. The “promise” Justice Gorsuch highlights was not simply an empty promise of geographic boundaries, it also included a permanent homeland with fully functioning tribal governments, including the power of taxation. With the reaffirmation of reservation boundaries and the reassumption of many governmental responsibilities, the Five Tribes must necessarily have the power to raise meaningful revenue to govern. If the Five Tribes and Oklahoma play their collective economic cards right, big change could come in the form of positive economic outcomes. Economists predict, or at least hope for, a post-COVID economic revival for rural communities in America’s heartland. To assist in this economic revival, the Five Tribes’ reservations could serve as laboratories for the formulation of economic development strategies that could serve as blueprints for other parts of rural America. For that to happen in eastern Oklahoma, McGirt will need to live up to its full potential, becoming much more than an overturned criminal conviction from inside Indian country. This article suggests several law and policy choices available to the Five Tribes, including how to maximize tax incentives to grow the reservation population base and support a diverse economy through small business and enterprise scale development. The article includes a call to action for tribal governments to formulate long-term economic strategies that will take advantage of tax attributes that attach to the various reaffirmed reservations. In conclusion, the article suggests possible compact arrangements with other Indigenous nations and with Oklahoma’s state and local governments. If the challenge of sovereignty is accepted, the Five Tribes have an opportunity to reconfirm and expand government powers that have been denied them for over a century, including the power to make the same sovereign tax choices afforded other sovereigns worldwide.