Source: http://www.chanrobles.com/usa/us_supremecourt/411/145/case.php
Timestamp: 2020-01-23 05:04:10
Document Index: 157583448

Matched Legal Cases: ['§ 461', '§ 10', '§ 470', '§ 72', '§ 72', '§ 465', '§ 465', '§ 476', '§ 465', '§ 8', '§ 5', '§ 5']

WHITE, J., delivered the opinion of the Court, in which BURGER, C.J.,and MARSHALL, BLACKMUN, POWELL, and REHNQUIST, JJ., joined. DOUGLAS, J., filed an opinion dissenting in part, in which BRENNAN and STEWART, JJ., joined, post, p. 411 U. S. 159. chanrobles.com-red
The home of the Mescalero Apache Tribe is on reservation lands in Lincoln and Otero Counties in New Mexico. The Sierra Blanca Ski Enterprises, owned and operated by the Tribe, is adjacent to the reservation, and was developed under the auspices of the Indian Reorganization Act of 1934, 48 Stat. 984, as amended, 25 U.S.C. § 461 et seq. [Footnote 1] After a feasibility study by the Bureau of Indian Affairs, equipment and construction money was provided by a loan from the Federal Government under § 10 of the Act, 25 U.S.C. § 470, and the necessary land was leased from the United States Forest Service for a term of 30 years. The ski area borders on the Tribe's reservation, but, with the exception of some cross-country ski trails, no part of the enterprise, its buildings, or equipment is located within the existing boundaries of the reservation.
The Tribe has paid under protest $26,086.47 in taxes to the State, pursuant to the sales tax law, N.M.Stat.Ann. chanrobles.com-red
§ 72-16-1 et seq. (1953), based on the gross receipts of the ski resort from the sale of services and tangible property. [Footnote 2] In addition, in 1968, the State assessed compensating use taxes against the Tribe in the amount of $5,887.19 (plus penalties and interest), based on the purchase price of materials used to construct two ski lifts at the resort. N.M.Stat.Ann. § 72-17-1 et seq. (1953). The Tribe duly protested the use tax assessment and sought a refund of the sales taxes paid. The State Commissioner of Revenue denied both the claim for refund and the protest of assessment, and the Court of Appeals of the State affirmed. The court held, essentially, that the State had authority to apply its nondiscriminatory taxes to the Tribe's enterprise and property involved in the dispute, and that the Indian Reorganization Act did not render the Tribe's enterprise a federal instrumentality, constitutionally immune from state taxation, nor did it, by its own terms, grant immunity from the taxes here involved. 83 N.M. 158, 489 P.2d 666 (1971). The Supreme Court of New Mexico denied certiorari. 83 N.M. 151, 489 P.2d 659 (1971). We granted the Tribe's petition for a writ of certiorari, 406 U.S. 905, to consider its claim that the income and property of the ski resort are not properly subject to state taxation. We affirm in part and in part reverse.
At the outset, we reject -- as did the state court -- the broad assertion that the Federal Government has exclusive jurisdiction over the Tribe for all purposes, and that the State is therefore prohibited from enforcing its revenue laws against any tribal enterprise, "[w]hether chanrobles.com-red
the enterprise is located on or off tribal land." [Footnote 3] Generalizations on this subject have become particularly treacherous. The conceptual clarity of Chief Justice Marshall's view in 31 U. S. 556-561 (1832), has given way to more individualized treatment of particular treaties and specific federal statutes, including statehood enabling legislation, as they, taken together, affect the respective rights of States, Indians, and the Federal Government. See McClanahan v. Arizona State Tax Comm'n, post, p. 411 U. S. 164; Organized Village of Kake v. Egan, 369 U. S. 60, 369 U. S. 71-73 (1982). The upshot has been the repeated statements of this Court to the effect that, even on reservations, state laws may be applied unless such application would interfere with reservation self-government or would impair a right granted or reserved by federal law. Organized Village of Kake, supra, at 369 U. S. 75; Williams v. Lee, 358 U. S. 217 (1959); New York ex rel. Ray v. Martin, 326 U. S. 498, 326 U. S. 499 (1946); Draper v. United States, 164 U. S. 240 (1896). Even so, in the special area of state taxation, absent cession of jurisdiction or other federal statutes permitting it, there has been no satisfactory authority for taxing Indian reservation lands or Indian income from activities carried on within the boundaries of the reservation, and McClanahan v. Arizona State Tax Comm'n, supra, lays to rest any doubt in this respect by holding that such taxation is not permissible absent congressional consent. But tribal activities conducted outside the reservation present different considerations. "State authority over Indians is yet more extensive over activities . . . not on any reservation." Organized Village of Kake, supra, at 369 U. S. 75. Absent express federal law to the contrary, Indians going beyond reservation boundaries have generally chanrobles.com-red
been held subject to nondiscriminatory state law otherwise applicable to all citizens of the State. See, e.g., Puyallup Tribe v. Department of Game, 391 U. S. 392, 391 U. S. 398 (1968); Organized Village of Kake, supra, at 369 U. S. 75-76; Tulee v. Washington, 315 U. S. 681, 315 U. S. 683 (1942); Shaw v. Gibson-Zahniser Oil Corp., 276 U. S. 575 (1928); Ward v. Race Horse, 163 U. S. 504 (1896). That principle is as relevant to a State's tax laws as it is to state criminal laws, see Ward v. Race Horse, supra, at 163 U. S. 516, and applies as much to tribal ski resorts as it does to fishing enterprises. See Organized Village of Kake, [email protected]
The Enabling Act for New Mexico, 36 Stat. 557, [Footnote 4] reflects the distinction between on- and off-reservation activities. Section 2 of the Act provides that the people of the State disclaim "all right and title" to lands
It is thus clear that, in terms of general power, New Mexico retained the right to tax, unless Congress forbade it, chanrobles.com-red
all Indian land and Indian activities located or occurring "outside of an Indian reservation." [Footnote 5]
We also reject the broad claim that the Indian Reorganization Act of 1934 rendered the Tribe's off-reservation ski resort a federal instrumentality constitutionally immune from state taxes of all sorts. @ 17 U. S. 365-366. chanrobles.com-red
The Indian Reorganization Act of 1934 neither requires nor counsels us to recognize this tribal business venture as a federal instrumentality. Congress itself felt it necessary to address the immunity question and to provide tax immunity to the extent it deemed desirable. There is, therefore, no statutory invitation to consider projects undertaken pursuant to the Act as federal instrumentalities generally and automatically immune from state taxation. Unquestionably, the Act reflected a new policy of the Federal Government, and aimed to put a halt to the loss of tribal lands through allotment. It gave the Secretary of the Interior power to create new reservations, and tribes were encouraged to revitalize their self-government through the adoption of constitutions and bylaws and through the creation of chartered corporations, with power to conduct the business and economic affairs of the tribe. [Footnote 6] As was true in the case before us, a tribe taking advantage of the Act might generate substantial revenues for the education and the social and economic welfare of its people. [Footnote 7] So viewed, an enterprise such as the ski resort in this case serve a federal function with respect to the Government's role in Indian affairs. But the
Choctaw, Oklahoma & Gulf R. Co. v. Mackey, 256 U. S. 531, 256 U. S. 536 (1921). See also Henderson Bridge Co. v. Kentucky, 166 U. S. 150, 166 U. S. 154 (1897). chanrobles.com-red
Id. at 11732. [Footnote 8] The Reorganization Act did not strip Indian tribes and their reservation lands of their historic immunity from state and local control. [Footnote 9] But, in the context of the Reorganization chanrobles.com-red
Act, we think it unrealistic to conclude that Congress conceived of off-reservation tribal enterprises "virtually as an arm of the Government." Department of Employment v. United States, 385 U. S. 355, 385 U. S. 359-360 (1966). Cf. Clallam County v. United States, 263 U. S. 341 (1923). On the contrary, the aim was to dissentangle the tribes from the official bureaucracy. The Court's decision in Organized Village of Kake, supra, which involved tribes organized under the Reorganization Act, demonstrates that off-reservation activities are within the reach of state law. See also Puyallup Tribe, 391 U.S. at 391 U. S. 398. What was said in Shaw v. Gibson-Zahner Oil Corp., 276 U. S. 575 (1928), is relevant here. At issue there was the taxability of off-reservation Indian land purchased with consent of the Secretary of the Interior with the accumulated royalties from the individual chanrobles.com-red
Indian's restricted allotted lands. Alienation of the purchased land was federally restricted. In rejecting a claim that state taxation of the land was barred by the federal instrumentality doctrine, [Footnote 10] the then Mr. Justice Stone wrote for a unanimous Court:
Id. at 276 U. S. 578-581. We accordingly decline the invitation to resurrect the expansive version of the intergovernmental immunity doctrine that has been so consistently rejected in modern times.
"shall be taken in the name of the United States in trust for the Indian tribe or individual Indian for which the land is acquired, and such lands or rights shall be exempt from State and local taxation. [Footnote 11]"
On its face, the statute exempts land and rights in land, not income derived from its use. It is true that a statutory tax exemption for "lands" may, in light of its context and purposes, be construed chanrobles.com-red
to support an exemption for taxation on income derived from the land. See Squire v. Capoeman, 351 U. S. 1 (1956); cf. Superior Bath House Co. v. McCarroll, 312 U. S. 176 (1941). [Footnote 12] But, absent clear statutory guidance, courts ordinarily will not imply tax exemptions and will not exempt off-reservation income from tax simply because the land from which it is derived, or its other source, is itself exempt from tax.
Oklahoma Tax Comm'n v. United States, 319 U.S. at 319 U. S. 606-607. See Squire v. Capoeman, supra, at 351 U. S. 6. Absent a "definitely expressed" exemption, an Indian's royalty income from Indian oil lands is subject to the federal income tax although the source of the income may be exempt from tax. Choteau v. Burnet, 283 U. S. 691, 283 U. S. 696-697 (1931). chanrobles.com-red
On the face of § 465, therefore, there is no reason to hold that it forbids income, as well as property, taxes. Nor does the legislative history support any other conclusion. As we have noted, several explicit provisions encompassing a broad tax immunity for chartered Indian communities were dropped from the bills that preceded the Wheeler-Howard bill. See n 9, supra. Similarly, the predecessor to the exemption embodied in § 465 dealt only with lands acquired for new reservations or for additions to existing reservations. 1934 House Hearings 11. Here, the rights and land were acquired by the Tribe beyond its reservation borders for the purpose of carrying on a business enterprise as anticipated by §§ 476 and 477 of the Act. [Footnote 13] These provisions were designed to encourage tribal enterprises "to enter the white world on a footing of equal competition." 78 Cong.Rec. 11732. In this context, we will not imply an expansive immunity from ordinary income taxes that businesses throughout the State are subject to. We therefore chanrobles.com-red
We reach a different conclusion with respect to the compensating use tax imposed on the personalty installed in the construction of the ski lifts. According to the Stipulation of Facts, that personal property has been "permanently attached to the realty." In view of § 465, these permanent improvements on the Tribe's tax exempt land would certainly be immune from the State's ad valorem property tax. See United States v. Rickert, 188 U. S. 432, 188 U. S. 441-443 (1903). We think the same immunity extends to the compensating use tax on the property. The jurisdictional basis for use taxes is the use of the property in the State. See Henneford v. Silas Mason Co., 300 U. S. 577 (1937); McLeod v. J. E. Dilworth Co., 322 U. S. 327, 322 U. S. 330 (1944). It has long been recognized that "use" is among the "bundle of privileges that make up property or ownership" of property and, in this sense at least, a tax upon "use" is a tax upon the property itself. Henneford v. Silas Mason Co., supra, at 300 U. S. 582. This is not to say that use taxes are, for all purposes, to be deemed simple ad valorem property taxes. See, e.g., United States v. Detroit, 355 U. S. 466 (1958), and its companion cases; Sullivan v. United States, 395 U. S. 169 (1969). But use of permanent improvements upon land is so intimately connected with use of the land itself that an explicit provision relieving the latter of state tax burdens must be construed to encompass an exemption for the former.
United States v. Rickert, supra, at 188 U. S. 442.
The Tribe's treaty with the United States, 10 Stat. 979, which acknowledges that the Tribe is "exclusively under the laws, jurisdiction, and government of the United States . . . ," does not alter the obvious effect of the State's admission legislation. See, e.g., Organized Village of Kake v. Earl, 369 U. S. 60, 369 U. S. 67-68 (1962), and cases cited therein.
Squire v. Capoeman involved the attempted imposition of federal capital gains taxes on the sale price of timber logged off allotted Indian timberland (located within a reservation). The timber constituted "the major value" -- if not the only practical value -- of the Indian's allotted land, and it was dear that, if the capital gains tax was to apply, the purposes and intent of the General Allotment Act of 1887 would, in large measure, have been frustrated. 351 U.S. at 351 U. S. 10. The Court, relying in part on "relatively contemporaneous official and unofficial writings" on the intended scope of the income tax laws, id. at 351 U. S. 9, declined to so interpret those later enacted laws and to find that the Government intended to tax its own ward in this particular manner. In contrast to Squire, we find nothing fundamentally inconsistent with the intent of the Indian Reorganization Act in permitting the gross receipts of the Tribe's off-reservation enterprise to be subject to nondiscriminatory state taxes.
The power of Congress granted by Art. I, § 8 "[t]o regulate Commerce . . . with the Indian Tribes" is an exceedingly broad one. In the liquor cases, the Court held that it reached acts even off Indian reservations in areas normally subject to the police power of the States. Perring v. United States, 232 U. S. 478. The power gained breadth by reason of historic experiences that induced Congress to treat Indians as wards of the Nation. See Gritts v. Fisher, 224 U. S. 640, 224 U. S. 642-643; United States v. Thomas, 151 U. S. 577, 151 U. S. 585; United States v. McGowan, 302 U. S. 535, 302 U. S. 538. The laws enacted by Congress varied from decade to decade. See U.S. Dept. of the Interior, Federal Indian Law 94-138 (1958), which is a revision of the monumental work, Handbook of Federal Indian Law prepared by Felix S. Cohen and published in 1940.
Loans had been made by the federal agency to individual Indians, but the experience had not been satisfactory. Id. at 3-4. The 1934 Act precluded such loans and set up a $10 million revolving-credit fund for loans chanrobles.com-red
The 1934 Act obviously is an effort by Congress to extend its control to Indian economic activities outside the reservation for the benefit of its Indian wards. The philosophy permeating the present Act was articulated chanrobles.com-red
by Mr. Chief Justice Marshall in @ 31 U. S. 556:
As noted in Warren Trading Post v. Tax Comm'n, 380 U. S. 685, most tax immunities of Indians have related to activities in reservations. But, as we stated in that case, the fact that the activities occurred on a reservation was not the controlling reason,
Federal Indian Law 590-591. There is no magic in the word "reservation." United States v. McGowan, supra, held that land purchased by Congress for a tribe, but outside a "reservation," was nonetheless "Indian country." While that case involved application of liquor laws, the Court stated that "Congress alone has the right to determine the manner in which this country's guardianship over the Indians shall be chanrobles.com-red
In the present case, Congress has attempted to give this tribe an economic base which offers job opportunities, a higher standard of living, community stability, preservation of Indian culture, and the orientation of the tribe to commercial maturity. We deal only with a tribal-developed enterprise. State taxation of that enterprise interferes with the federal project. The ski resort, being a federal tool to aid the tribe, may not be taxed by the State without the consent of Congress. Congress, by § 5 of the Act, has made the "lands or rights" acquired for the tribe exempt from state and local taxation. Section 5, indeed, states that "lands or rights" acquired under the 1934 Act shall be held "in trust for the Indian tribe or individual Indian for which the land is acquired." There is no more convincing way to tax "rights" in land than to impose an income tax on the gross or net income from those rights. If § 5 be thought to be ambiguous, we should resolve the ambiguity in favor of the tribe. As stated in Carpenter v. Shaw, 280 U. S. 363, 280 U. S. 367,
In Squire v. Capoeman, 351 U. S. 1, we resolved doubts respecting the federal income tax in favor of the Indian. There is the same reason for taking that course here.
The tribal ski enterprise, unlike the private entrepreneur in Helvering v. Mountain Producers Corp., 303 U. S. 376, on which the Court relies, is plainly a federal instrumentality -- authorized and financed by Congress with the aim of starting the tribe on commercial ventures. This case has no relation to Oklahoma Tax Comm'n v. United States, 319 U. S. 598, which raised the question whether state inheritance taxes could be levied on restricted chanrobles.com-red
property. The Court only held that restricted property, as created by Congress, carried no implication of estate tax exemption. Oklahoma Tax Comm'n v. Texas Co., 336 U. S. 342, also relied on by the Court, merely held that a lessee of mineral rights in Indian lands was not immunized from paying state gross production taxes and state excise taxes on petroleum produced from the lands. Those cases would be relevant here if the tribe had leased the ski resort to an outsider who sought the tribal tax immunity. We deal only with an income tax levied on a tribal corporate enterprise conducted by the tribe with federal funds on federal lands leased to the tribe. Federal Indian Law distinguished the Helvering and like cases relied on by the Court from an enterprise "organized solely to carry out governmental objectives, such as the tribal corporations organized" under the 1934 Act with which we now deal, id. at 852-853.