Court Opinion

ID: 9427968
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:22:26.754108+00
Date Added: 2024-06-11T17:23:10.851298
License: Public Domain

Mr. Justice Rehnquist,
concurring in part, concurring in the result in part, and dissenting in part.
Since early in the last century, this Court has been struggling to develop a coherent doctrine by which to measure with some predictability the scope of Indian immunity from state taxation.1 In recent years, it appeared such a doctrine was well on its way to being established. I write separately to underscore what I think the contours of that doctrine are because I am convinced that a well-defined body of principles is essential in order to end the need for case-by-case litigation which has plagued this area of the law for a number of years. *177That doctrine, I had thought, was at bottom a pre-emption analysis based on the principle that Indian immunities are dependent upon congressional intent, McClanahan v. Arizona State Tax Comm’n, 411 U. S. 164 (1973); Mescalero Apache Tribe v. Jones, 411 U. S. 145 (1973); Moe v. Salish & Kootenai Tribes, 425 U. S 463 (1976); Bryan v. Itasca County, 426 U. S. 373 (1976), at least absent discriminatory state action prohibited by the Indian Commerce Clause. I see no need for this Court to balance the state and tribal interests in enacting particular forms of taxation in order to determine their validity. Ante, at 156-157. Absent discrimination, the question is only one of congressional intent. Either Congress intended to pre-empt the state taxing authority or it did not. Balancing of interests is not the appropriate gauge for determining validity since it is that very balancing which we have reserved to Congress. I concur in the Court’s conclusion, however, that the cigarette tax is valid because Congress has not pre-empted state authority to impose the tax.
I
The principles necessary for the resolution of this case are readily derived from our opinions in McClanahan and Mes-calero. McClanahan confirmed the trend which had been developing in recent decades towards a reliance on a federal pre-emption analysis. Congress has for many years legislated extensively in the field of Indian affairs. McClanahan therefore recognized that the answer to most claims of Indian immunity from state power could be resolved by looking “to the applicable treaties and statutes which define the limits of state power.” 411 U. S., at 172.2
*178Despite the expanse of congressional statutes regulating Indian affairs over the years, McClanahan foresaw that congressional intent would not always be readily apparent. As a guide to ascertaining that intent in such cases, the Court invoked the tradition of Indian sovereignty as reflected by the earlier decisions of this Court: “The Indian sovereignty doctrine is relevant, . . . not because it provides a definitive resolution of the issues in this suit, but because it provides a backdrop against which the applicable treaties and federal statutes must be read.” Ibid.
McClanahan readily illustrates application of the analysis. The question presented in that case was whether the State of Arizona had jurisdiction to impose a tax on a reservation Indian’s income derived solely from reservation sources. The Court first reviewed the “tradition of sovereignty” relevant to this “narrow question.” Id., at 168.3 Historically this Court had found Indians to be exempt from taxes on Indian ownership and activity confined to the reservation and not involving non-Indians.4 The Kansas Indians, 5 Wall. 737 (1867). With this tradition placing reservation-ownership beyond the jurisdiction of the States, the Court undertook a review of the relevant treaties and statutes to determine *179whether this tradition of immunity had been altered by Congress.5 Although no legislation directly provided that Indians were to be immune from state taxation under these circumstances, the enactments reviewed were certainly suggestive of that interpretation. See Arizona Enabling Act, § 20, 36 Stat. 569; the Buck Act, 4 U. S. C. § 105. The Court therefore declined to infer a congressional departure from the prior tradition of Indian immunity absent an express provision otherwise. Thus, as this Court’s opinion in Bryan v. Itasca County, supra, later characterized it, McClanahan established a rule against finding that “ambiguous statutes abolish by implication Indian tax immunities.” 426 U. S., at 392.
The companion case to McClanahan, Mescalero Apache Tribe v. Jones, supra, established the corollary principle: When tradition did not recognize a sovereign immunity in favor of the Indians, this Court would recognize one only if Congress expressly conferred one. In Mescalero, the State of New Mexico asserted the right to impose a tax on the gross receipts of a ski resort owned and operated by an Indian tribe. The resort was located on federal land adjacent to the Indian reservation, was developed under the auspices of the Indian Reorganization Act of 1934, 25 U. S. C. § 461 et seq., and was funded with federal money.
The Court in Mescalero applied precisely the analysis McClanahan adopted. First, the Court reviewed the tradition of sovereignty and found that no immunity for off-reservation activities had traditionally been recognized. See Shaw v. Gibson-Zahniser Oil Corp.,276 U. S. 575 (1928); Ward v. Race Horse, 163 U. S. 504 (1896). With that tradition as its backdrop, the Court reviewed the particular statutes relevant to the question of whether or not Congress intended *180to immunize the Indian enterprise from the state gross receipts tax. The principal Act relevant to the inquiry was the Indian Reorganization Act, since it was the Act under which the tribal enterprise was being conducted. Section 5 of that Act, 25 U. S. C. § 465, provides that the lands acquired under authority of the Act are exempt from state and local taxation. The Court nevertheless refused to read § 5 as broadly conferring an immunity from income as well as property taxes. The Court invoked the well-established rule that “ 'tax exemptions are not granted by implication,’ ” that such exemptions may not rest on “ 'dubious inferences,’ ” but that they must be provided in “ 'plain words.’ ” 411 U. S., at 156, quoting Oklahoma Tax Comm’n v. United States, 319 U. S. 598, 606-607 (1943). Despite the clear federal purpose of promoting this tribal economic enterprise, the Court found that no judicial immunities could appropriately be implied.6
The subsequent Indian tax immunity cases have been unanimously resolved through application of the corollary principles of construction established in McClanahan and Mescalero. In Moe v. Salish & Kootenai Tribes, the Court invalidated attempted state taxation of Indian conduct and property confined to the reservation. The Court found, however, that imposition of a state tax on its non-Indian residents’ purchases of cigarettes from Indian sellers on a reservation could not be found to “ru[n] afoul of any congressional enactment dealing with the affairs of reservation Indians.” 425 U. S., at 483. In Bryan v. Itasca County, supra, the question was whether the congressional grant of civil jurisdiction to the States conferred by 28 U. S. C. § 1360 was a general grant of power to tax reservation Indians. The tradition, of course, was otherwise and the statute did not specifically state that *181a repeal of those immunities was intended. Consistent with the principles enunciated in McClanahan, the Court reasoned that
“[t]his omission has significance in the application of the canons of construction applicable to statutes affecting Indian immunities, as some mention would normally be expected if such a sweeping change in the status of tribal government and reservation Indians had been contemplated by Congress.” 426 U. S., at 381.
Adherence to these principles of construction maximizes the ability of States and tribes to determine the scope of their respective authority without resort to adjudication, and maximizes judicial deference to the legislative forum.
II
Application of these principles readily resolves the validity of the cigarette tax levied by the State. The tax represents a permissible nondiscriminatory exercise of state sovereign authority which has not been pre-empted by Congress. These principles also dispose of the claim of nontribal Indians to an immunity.
A
At issue here is not only Indian sovereignty, but necessarily state sovereignty as well. As a general rule, of course, States are given wide latitude in the exercise of their sovereign powers to tax. In Michelin Tire Corp. v. Wages, 423 U. S. 276, 293 (1976), this Court cautioned against invalidating any state taxation absent “the clearest . . . mandate.” Here the State attempts to tax its citizens’ use of cigarettes purchased in a territory subject to the control of another sovereign.7 As a general matter, we have repeatedly held that such an exercise of state taxing power is permissible. Here there is no ques*182tion that the State, by taxing its own non-Indian residents, has “exerted its power in relation to opportunities which it has given, to protection which it has afforded, to benefits which it has conferred,” and “[t]he fact that a tax is contingent upon events brought to pass without a state does not destroy the nexus between such a tax and transactions within a state for which the tax is an exaction.” Wisconsin v. J. C. Penney Co., 311 U. S. 435, 444-445 (1940). Use tax schemes applicable to purchases in other States, precisely comparable to that in issue here, have long been upheld as a permissible exercise of state taxing power. Henneford v. Silas Mason Co., 300 U. S. 577 (1937); National Geographic Society v. California Board of Equalization, 430 U. S. 551 (1977). Of course in order to. collect the tax from the merchant located beyond the territorial jurisdiction of the taxing State, there must also be a relationship between the State and the burdened merchant sufficient to satisfy principles of due process. National Geographic Society, supra. After Moe, however, the retailers on the tribal reservation cannot gain invalidation of the tax on this basis. 425 U. S., at 482-483. Thus the State has exercised its taxing authority consistent with its sovereign powers and constitutional due process.
An otherwise legitimate exercise of state taxing authority will be illegitimate, of course, if it is sought to be applied in contravention of a constitutional or federal statutory immunity. Indian sovereign immunity from nondiscriminatory taxation is a question of congressional pre-emption. As outlined, we must first identify the backdrop of sovereignty in order to interpret congressional intent in the field. As McClanahan implicitly recognized through its citation of authorities, the traditional cases clearly did not find that Indian sovereign immunity was contravened by subjecting tribes to the burdens inherent in state taxation of the reservation activities of non-Indians. Surplus Trading Co. v. Cook, 281 U. S. 647 (1930); Utah & Northern R. Co. v. Fisher, 116 U. S. 28 (1885); Thomas v. Gay, 169 U. S. 264 (1898).
*183Thomas v. Gay perhaps best illustrates the “backdrop” relevant to the State’s cigarette tax in issue. In Thomas, the State attempted to tax the cattle grazing on reservation lands leased, pursuant to congressional authorization, by Indians to non-Indians. The Court found that the Indians’ sovereign immunity did not operate to curtail state authority to impose this tax. The case is particularly significant because of the arguments which it expressly rejects. The tribe complained that the tax had to be invalidated because the revenues which it received as lessor would be directly reduced as a result of the state tax since lessees would be unwilling to pay the same price for tax-exempt grazing lands as for taxable grazing lands. The Court stated that it is urged that
“the money contracted to be paid for the privilege of grazing is paid to the Indians as a tribe, and is used and expended by them for their own purposes, and that if, by reason of this taxation, the conditions existing at the time the leases were executed were changed, or could be changed by the legislature of Oklahoma at its pleasure, the value of the lands for such purposes would fluctuate or be destroyed altogether according to such conditions.” Id., at 273.
Thomas v. Gay is a part of the “backdrop” which supports Washington’s power to impose the tax in issue.8 The ap-*184pellee Tribes maintain that the tax in issue is impermissible, though permissible in Moe, because here the Tribes are raising governmental revenues and establishing commercial enterprises. The effect of the state tax then would be to reduce the tribe’s governmental revenues and force the tribe to choose between losing those revenues by forgoing its tax or subjecting reservation retailers to a competitive disadvantage compared to those retailers outside the reservation not subject to the tribal tax. These may be the facts, but they are facts which Thomas v. Gay held to be irrelevant to the recognition of a sovereign tribal immunity. In Thomas, the tribe’s involvement was far more direct than that in issue here since it was a tribal leasing enterprise. There, the State’s exercise of jurisdiction clearly required the tribe, as lessor, to forgo some portion of rent which could have been charged, and used the same as tax revenues, had the State not asserted its taxing authority. The tribe could recover the full rent (part of which may readily be considered the equivalent of a tax and another part perhaps proprietary profit) only at the risk of discouraging the economic enterprise. It is apparent therefore that the backdrop relevant to this action is one of no sovereign immunity.9
*185Congress could of course countermand this “tradition” of no immunity. But it has not done so. Under Mescolero, it is dispositive of this case that no express immunity has been granted by Congress since the tradition of sovereignty counsels against the immunity. Even going beyond the Mescalero rule against implying an immunity from taxation, I agree with the Court that a review of the statutes does not suggest, even remotely, that Congress intended either by its laws or the policies underlying them to prevent the States from taxing these transactions.10 In all areas of tax immunity, this Court has staunchly refused to consider the permissibility of a tax by *186reference to the economic burdens which it imposes if those burdens are nondiscriminatory and satisfy due process. See United States v. County of Fresno, 429 U. S. 452 (1977) (state taxation of the Federal Government); New York v. United States, 326 U. S. 572 (1946) (federal taxation of the state government); Michelin Tire Corp. v. Wages, 423 U. S. 276 (1976) (state taxation of imports and exports). If Indians are to function as quasi co-sovereigns with the States, they like the States, must adjust to the economic realities of that status as every other sovereign competing for tax revenues, absent express intervention by Congress.11
B
Relying on the same pre-emption analysis, I also concur in the Court’s conclusion that Indians not members of the governing tribe are not immune from taxation. McClanahan/ Mescalero are once again dispositive. As McClanahan explained, the doctrine of sovereign immunity traditionally *187recognized by this Court derived from the sovereign relationship between a tribe and its members, and a recognition that state jurisdiction should not be asserted in a manner which “frustrates tribal self-government.” 411 U. S., at 170. See Williams v. Lee, 358 U. S. 217, 219-220 (1959); Moe, 425 U. S., at 483. Immunities which have formed the backdrop for this Court’s pre-emption analysis have been those derived from these precepts. This form of immunity, and the principles which underlie it, are simply inapplicable to the recognition of a tax immunity for an individual who resides on a reservation, but is not a member of the tribe. The holding in Moe that non-Indians, even those resident on a reservation, could be subject to cigarette taxes for on-reservation purchases, was a reflection of this principle. The fact that the nonmember resident happens to be an Indian by race provides no basis for distinction. The traditional immunity is not based on race, but accouterments of self-government in which a nonmember does not share.
Congress of course has gone beyond protection of merely Indian self-government, extending its regulatory authority to Indians not residing on the reservation of their own tribe, or, in fact, not residing on any reservation. See 25 U. S. C. § 13 (1970 ed.), as construed in Morton v. Ruiz, 415 U. S. 199 (1974). See also the definition of “Indian” in the Indian Reorganization Act, 25 U. S. C. § 479. Congress, however, has certainly provided no express immunity from the type of taxation in issue for Indians not members of the tribe, and under the Mescalero principles of construction, the backdrop of sovereignty makes it clear that it is not this Court’s province to imply such an immunity. These Indians residing on the reservation are citizens of the State, just the same as their non-Indian neighbors, and I am unwilling to conclude that their Indian status entitles them to an implied immunity from taxes which their non-Indian neighbors are required to pay.
*188III
I cannot concur in the Court’s disposition of the challenge to the state vehicle excise tax. Wash. Rev. Code, chs. 82.44 and 82.50 (1976 and Supp. 1977). The lower court did not conduct a very extensive inquiry into the mechanics or state interpretation of this excise taxing scheme, believing that the tax was clearly invalid under our prior decision in Moe. In Moe, this Court refused to uphold a State’s authority to impose a property tax on motor vehicles owned by tribal members residing on the reservation. The lower court here found that Moe was controlling because in both cases the vehicles which the State seeks to tax are used both on and off the reservation, and the tax is assessed annually at a percentage of the market value of the vehicle. Thus the lower court, and this Court, have concluded that the only difference between the taxes is one of label, a difference insufficient to warrant a difference in outcome. Complete Auto Transit, Inc. v. Brady, 430 U. S. 274 (1977). The Court therefore looked no further to the operation of the taxing scheme in question.
I do not find the issue clearly disposed of by Moe without a dispositive construction of the actual operation of this state taxing scheme. There is of course no question that this Court has discarded the controlling significance of the label a State attaches to its taxes. A tax instead must be judged by its “practical operation.” Detroit v. Murray Corp., 355 U. S. 489 (1958). But only if the practical operation of this excise taxing scheme is the same as the property taxing scheme addressed in Moe would the tax be invalid on the basis of that decision. In Moe, the tax was assessed on the basis of ownership, and, therefore, an Indian was required to pay the tax regardless of whether the vehicle was ever used off the reservation. If the state taxing scheme in question here, however, exacts a tax only in the event that the vehicle is used off the reservation, then the practical operation of *189the taxes would be totally different. In Moe, the Indian purchaser could not avoid assessment of the tax once the vehicle was purchased. It is possible, however, that under an excise taxing scheme no tax would be assessed if the vehicle were used only on the reservation.
What is dispositive for me then is whether Washington has structured or will construe its overall tax and exemption scheme so as to avoid exaction of the tax in the event the vehicle is never used off the reservation. No decision of this Court would preclude the State from taxing Indians for the use of off-reservation highways. The lower court did not appreciate the significance of this distinction and accordingly did not focus on the manner in which the state taxing scheme would be applied to Indians limiting their vehicle use to the reservation. Judge Kilkenny, in a dissenting opinion, found the record inadequate to resolve the question of validity. I agree with Judge Kilkenny that federal courts cannot invalidate state taxes without a thorough review of state law and precedents necessary to determine whether the scheme in fact contravenes federal law. It may well be that the excise tax is applicable without exception to even those Indians using their vehicles exclusively on the reservation, but I would remand the question to the lower court to clarify that this is the controlling question so that it might examine the state taxing scheme under a corrected view of what federal law requires. Cf. Perkins v. Benguet Consolidated Mining Co., 342 U. S. 437 (1952); Zacchini v. Scripps-Howard Broadcasting Co., 433 U. S. 562, 578-579 (1977).
Assuming a construction which excludes reservation use, arguendo, I do not find it significant that Washington has not tailored this tax to the “amount of actual off-reservation use,” in which case the Court suggests this tax might be permissible. A non-Indian resident of the State of Washington pays the same tax on his use of the public highways whether he drives his car once a year or every day. We have certainly never held that a State is under an obligation to apportion *190its use taxes in such a way that reflects actual use. I am aware of no principle for making a different rule to cover the ease of Indians using the public highways. If they choose to avoid the use tax, they need only limit their driving to reservation boundaries. But once they venture onto highways off the reservation, nothing in the United States Constitution, or in the federal statutes, prevents them from being subject to use taxes in common with other state residents.
I would therefore reverse the judgment of the District Court on the issue of the permissibility of the State’s assessment of its cigarette tax on purchases made by non-Indians, and by Indians not members of the governing tribe. I would remand the case to that court for a determination of the construction and effect of the state excise tax.

 Much of that developmental history is recounted in McClanahan v. Arizona State Tax Comm’n, 411 U. S. 164, 168-172 (1973).

 The Court in McClanahan did not resolve to what extent residual Indian sovereignty in the total absence of federal treaty obligations or legislation still would be recognized. The Court found that “[t]he question is generally of little more than theoretical importance, . . . since in almost all cases federal treaties and statutes define the boundaries of federal and *178state jurisdiction.” 411 U. S., at 172, n. 8. I am convinced that this “residue” of sovereignty is no greater than the freedom from nondiscriminatory taxation held sufficient to protect sovereignty in other areas of constitutionally derived immunities. See n. 9, infra. Our opinions have recognized that Indian sovereignty is dependent upon congressional preservation, see United States v. Wheeler, 435 U. S. 313, 323 (1978), and I decline to use our adjudicatory powers to assume a role properly reserved to Congress.

 The Court emphasized that its review of Indian sovereignty was relevant only to this narrow category, i. e., the reservation-derived income of a reservation Indian, and that the Court was expressly not reviewing any situation in which the State attempted to exert its sovereignty over non-Indians undertaking activity on Indian reservations. 411 U. S., at 168.

 I use “Indians” throughout this discussion of sovereign immunity to refer to members of a reservation tribe. See infra, at 186-187.

 The Court has explicitly held that attributes of Indian sovereignty are subject to complete defeasance by Congress. United States v. Wheeler, supra, at 323.

 In addition, the Court expressed the opinion that congressional policy was not at odds with state taxation since Congress intended that the Indians be prepared to “enter the white world on a footing of equal competition.” 411 U. S., at 157.

 Indian reservations are not of course subject to the exclusive control of the tribe. The Federal Government and the States also have jurisdiction for some purposes.

 It should be noted that the principles in Thomas v. Gay were not always those used to determine Indian immunities. A series of decisions, as noted in McClanahan, treated Indian immunities as derivative from the Federal Government’s immunity from state taxation. During the reign of the treatment of Indian reservations as federal instrumentalities for purposes of state taxation, this Court did prohibit States from taxing the net income derived by the lessees of Indian lands. Gillespie v. Oklahoma, 257 U. S. 501 (1922). See also Choctaw, O. & G. R. Co. v. Harrison, 235 U. S. 292 (1914); Indian Territory Illuminating Oil Co. v. Oklahoma, 240 U. S. 522 (1916). While Thomas v. Gay was never explicitly overruled, these decisions were clearly inconsistent. Nevertheless, it was the line of *184analysis employed in Gillespie that was later overruled in Helvering v. Mountain Producers Corp., 303 U. S. 376 (1938). Thomas v. Gay stands as the traditional analysis of Indian sovereign immunity held to be relevant in McClanahan.

 This conclusion derives support from not only Thomas v. Gay but also analogous applications of sovereign tax immunities. When two sovereigns have legitimate authority to tax the same transaction, exercise of that authority by one sovereign does not oust the jurisdiction of the other. If it were otherwise, we would not be obligated to pay federal as well as state taxes on our income or gasoline purchases. Economic burdens on the competing sovereign also do not alter the concurrent nature of the taxing authority. Decisions of this Court unequivocally recognize that a state tax comparable to that in issue, imposed on its residents’ transactions in another State, or on a federal enclave, will not be barred by force of the respective immunities of that State or the Federal Government. In *185Henneford v. Silas Mason Co., 300 U. S. 577 (1937), this Court upheld a state tax on one of its resident’s use of goods purchased in another State without regard to the fact that the other State’s competitive ability to tax the same transaction was obviously reduced. The Court observed that such a tax was permissible even if no credit for the other state tax were allowed. Id., at 581. See also National Geographic Society v. California Board of Equalization, 430 U. S. 551 (1977). Even the sovereign immunity of the Federal Government would not prevent the effects of a tax comparable to those in issue. In United States v. County of Fresno, 429 U. S. 452 (1977), the State sought to impose a possessory use tax on federal employees occupying federal housing located in federal enclaves within the State of California. This Court upheld the tax even though it accepted the Federal Government’s argument that in order to remain competitive as an employer or landlord, it would have to reimburse the employees for the payment of the added cost. Id., at 464, and n. 12. See also United States v. Detroit, 355 U. S. 466, 472 (1958); Alabama v. King & Boozer, 314 U. S. 1, 12 (1941). Thus the State, through its exercise of taxing authority, can effectively require the Federal Government to forgo revenues which would otherwise be available to it in order to remain competitive as an enterprise.

 The total absence of any suggestion that Congress intended to confer the immunity sought in this action should not be surprising. As this Court has found, other statutes are premised on congressional “recognition of the imperative need of a State to administer its own fiscal operations,” free from federal interference. Tully v. Griffin, Inc., 429 U. S. 68, 73 (1976). In Tully, this congressional policy was not found to be diminished even though the State sought to assert its taxing authority over nonresidents.

 These considerations, determinative in other areas of tax immunity law, are equally appropriate when one of the taxing jurisdictions is an Indian tribe. While Indian tribes are not States, the tribes are also not helpless hostages of the State absent judicial intervention. Two substantial sources of protection are available to them. First, the Indians could not be subjected to the burdens of discriminatory taxation, e. g., a state tax on only cigarette purchases on a reservation with no corresponding off-reservation tax. The prohibition of discriminatory taxation has been recognized by this Court as a substantial safeguard against the potential for any abusive taxation since only those taxes which the general population are willing to withstand can be imposed. See County of Fresno, supra, at 463, n. 11; Alabama v. King & Boozer, supra (federal immunity) ; Complete Auto Transit, Inc. v. Brady, 430 U. S. 274 (1977) (state taxation of interstate commerce). Second, Indian tribes are always subject to protection by Congress. This source of protection is more than adequate to preclude any unwarranted interference with tribal self-government. Congress, and not the judiciary, is the forum charged with the responsibility of extending the necessary level of protection beyond that inherent in prohibiting nondiscriminatory taxation.