“Money is like health. Having it is no guarantee of happiness. But the absence of it can make one miserable.”
SUZE ORMAN
Do Indians get a break on taxes, and if so, why?
Some Indians do get a break on some taxes—but of course, it’s complicated. All Indians, whether they are enrolled members or not, must pay federal income tax. All Indians must also pay property taxes in the county or municipality in which they own a house—unless they live on tribal trust land, which is the case for a small percentage of Indian people. All Indians must also pay state income tax unless they are enrolled members who obtain all of their income from their tribe and live on their reservation, leaving only a small number of Indians exempt from state income tax. In Minnesota, for example, only 23 percent of enrolled Indians live on a reservation.1 Only some of those obtain all their income from that reservation. All Indians also pay sales tax on everything other Americans do with the exception of vehicles.
The reasons for these complex tax rules lie in history. Essentially, a state government has no jurisdiction over Indians on Indian land unless the federal government specifically gives that authority to states. That is why Indians living on Indian land pay federal but not state income tax. Many tribes have negotiated compacts with the states in which they are located by which those tribes agree to pay other state taxes such as sales tax in return for a monetary payment from the state government.
Many Americans feel that it is simply unfair that Indians should not be taxed on all things in all the ways that most Americans are taxed. And unfairness seems very un-American to them. Most Indians counter that there is nothing in their entire history that was fair to them. When weighed against traumas from the loss of the land to assimilation policies to the way that the government continues to ignore poverty in Indian country, the small tax benefits that go to a small percentage of tribal members hardly seems worth fussing about. Tribal leaders also frequently point out that they supply many in-kind services to nonnative people by plowing roads, providing police protection and fire service on reservation lands where many nonnative people live, and bearing the expense for those services to tribal members that county and state governments would be obligated to provide if the tribes did not.
Both opponents and supporters are unaware that any significant change to the tax status of Indians would require revisiting the U.S. constitution and many of the treaties the United States signed with Indian nations. Opening those legal processes would probably cost the U.S. government and its taxpaying citizens far more money than they would save by living with the status quo. The special tax status of tribal members is part of the structure and payment that the United States had to agree to in order to obtain the rest of America from Indians. There is no way to redo one without redoing the other.
Do Indians get a break on license plates?
Indian nations are exempt from the authority of state governments with the exception of jurisdiction shifts in places where Public Law 280 is in effect. For this reason, many tribes license motor vehicles independently from state agencies. State governments, wanting to get their hands on some of the revenue stream and keep records of all tribal vehicles in the state system for purposes of law enforcement, have negotiated compacts with tribal governments in many places by which state governments enable and support tribal vehicle licensing (with some limitations). As a result, enrolled tribal citizens can exempt themselves from state vehicle sales tax if the automobile dealer agrees to deliver the vehicle to the tribal member on the reservation. They can also obtain and renew license plates at a subsidized rate.
Tribal license plates are an affirmation of sovereignty for many Indians but sometimes a bone of contention as well. Many tribal members feel they are targeted for racial profiling by their distinctive license plates.
Why should Indians be eligible for welfare if they are not taxed the same way as everyone else?
Indians are U.S. citizens and shouldn’t be denied the benefits of other citizens because of their race. Further, the U.S. federal government has legal obligations to provide for the health, education, and welfare of American Indians. Reneging on that responsibility would be not only morally but legally problematic. And finally, funds and benefits to citizens of any given state are distributed through auspices of county social service agencies but are not paid for by county or state government. Welfare benefits are paid for by the U.S. federal government and sent to states in block grants to distribute to their citizens. Because Indians are not exempt from federal taxation, it is bogus to assert that they are not paying into the pool that finances welfare.
In addition, a great nation can only be as happy as its least happy citizens. When the unemployment rate in the United States reached a sustained level over 15 percent in the 1930s, they called it the Great Depression. Massive public policy initiatives sought to remedy the nation’s economic woes. Well, the unemployment rate in Indian country has never been below 15 percent. For Indians, the “Great Depression” began in the nineteenth century, and it has never ended. The unemployment rate in many communities averages 50 percent, although most see rates around 20 percent. While a couple of tribes have successfully eliminated poverty, they are the exception, not the rule. And the fact that the first Americans continue to suffer so much makes a sad and untenable statement about the health of American democracy. We should be doing more for Indians, not less.
Are all Indians living in extreme poverty?
No. Some tribes, such as the Pequot (Connecticut), the Seminole (Florida), and the Mdewakanton Dakota (Minnesota), have successfully eliminated poverty for all of their enrolled tribal citizens. Many other tribes have successfully reduced the unemployment rate from 50 to 20 percent. This dramatic improvement has largely been brought about by casino gaming. But any place where 20 percent of the population is unemployed has a problem. In Nevada and South Dakota, tribal gaming enterprises are not monopolies, and unemployment is 50 percent or higher in many tribal communities. So, there is a diversity of experience with poverty for Indian people in the United States today. A few groups are well-off. Many groups are improving but are still disproportionately poor. And some groups still have most of their citizens living in abject poverty.
Are all Indians rich from casinos?
As stated above, a few groups are well-off, many groups are improving but still disproportionately poor, and some groups have most of their citizens living in abject poverty. The advent of casino gaming has affected some Native Americans far more than others. For tribes that have a monopoly on gaming in a given region and a very small number of tribal members, casinos have provided a dramatic impact on their members’ financial status. But for most Indians who live in rural areas or come from tribes with large numbers of members, the impact has been much smaller.
Each tribe is an independent nation, with no legal obligations to other tribes. Casino profits are not shared by all tribes in America. Wealthy tribes often engage in philanthropy with less fortunate tribes, and in Wisconsin all tribes agreed to share a small percentage of revenues. But those developments have not come close to leveling the dramatic wealth disparities among tribes, even in Wisconsin.
How has casino gambling affected Indian communities?
Gaming and gambling are not governed by federal statutes, which is why some states like Nevada and South Dakota have legalized many forms of gambling but others, like Minnesota, have not. Indian gaming got its start in the late 1970s when the Seminole Indians of Florida ignored the state’s gaming laws (which allowed church bingo but nothing more) and developed a high-stakes bingo operation. The local sheriff tried to shut it down, but the tribe filed for an injunction, which was appealed all the way to the Fifth Circuit Court of Appeals. The decision, Seminole Tribe of Florida v. Robert Butterworth (1981), upheld the right of the Seminole to develop gaming operations without regard to state laws. It was another sovereignty victory for tribal governments and a huge eye-opener for tribes in states that had not legalized casino gambling.2
Legal challenges to tribal gaming persisted after Seminole v. Butterworth. However, the U.S. Supreme Court ruled in California v. Cabazon Band of Mission Indians (1987) that California could not regulate gaming on Indian land when it allowed gaming elsewhere in the state. Cabazon removed the final obstacles, and tribal gaming proliferated across the country. Within two years, hundreds of Indian nations developed some type of high-stakes bingo or casino-style gaming operation.
Many Indians worry about negative impacts of gaming on tribal members because they disproportionately patronize the casinos. Increased rates of gambling addiction, exposure to secondhand cigarette smoke, and what many view as an unhealthy and untraditional environment in the casinos are among the greatest worries. There is also significant concern about the misinformed assumption that “all Indians are rich from casinos” (see page 132), which has led many granting agencies and regular citizens to believe that tribes do not need outside help in fighting poverty or developing programs. The influx of money to tribes through gaming has also increased internal political strife and accusations of mismanagement and embezzlement. Some of those accusations are well founded; others are not.
The Mille Lacs Ojibwe (Minnesota) used casino income to build a new health clinic and new schools, establish an all-band-member retirement plan, purchase health insurance for all tribal members, purchase a bank and small businesses—and still save half of their casino revenues. The financial and political power they wield speaks well for the potential development of gaming operations in Indian country. It is up to tribal members and their governments to make the decisions they believe are best for them.
How have per capita payments affected Indian communities?
Per capita payments comprise a percentage of casino profits or a fixed amount of money distributed to every member of a tribe. Most tribes will probably never be able to offer them, since they have so many tribal members relative to their income stream from gaming. However, some communities with small populations and large casino operations have recently begun to pay a portion of their casino proceeds directly to tribal members.
The payments create huge dilemmas for tribal governments and members. Members want the payments, and they pressure or vote in leaders who promise to start and increase them. The policy often puts undue stress on the bottom line for tribes that stretch margins to make per capita payments and diverts revenue from deserving programs (health, education, housing). It becomes a catch-22 situation for tribal officials who find it politically impossible to reduce per capita payments but difficult to expand other businesses and programs when significant funds are diverted to the per capita payments.
For recipients, the payments are well-intended and welcome assistance, but some feel that per capita payments are a double-edged sword that does more harm than good. Tribes often put aside per capita payments for minors and give them large lump-sum payments at age eighteen. This timing accelerates negative behavior for some youth, who want to party with the largest check they have ever received, and often provides a disincentive for further education or career development. In addition, tribal members who used to augment their income and feed their families by harvesting wild rice, berries, and fish and by gardening, but now receive per capita payments, are far less likely to participate in those traditional lifeways, providing another disincentive to healthy living and further eroding traditional culture. Moreover, other tribes that can’t really afford to make per capita payments have actually been exploring ways to cut spending on social services and education in order to make per capita payments in response to tribal member demand.
What is the future of Indian gaming?
I believe Indian gaming will not last forever. It will not end because politicians hate Indians but because they see opportunity. The economic and political climate in the United States has made it very difficult for both Democrats and Republicans to accomplish their campaign objectives without committing political suicide. Democrats can only raise taxes so high before they get voted out of office; Republicans can only cut education and entitlements so much before they get voted out of office. It is far easier for both parties to compete with Indian gaming at the state level. I believe state governments will increasingly develop and expand gaming enterprises to bridge revenue shortfalls, which will cause Indian gaming to be less profitable due to increased competition. The political backlash in Indian country is far easier for most politicians to deal with than the potential backlash from the general public for doing other things.
What should tribes be doing to improve the economic condition of their citizens?
Tribal governments are working hard to advance the economic well-being of their communities. Gaming has obviously given them a major boost over the past twenty years. My primary frustration with the business development plans of many tribal governments is that they often do not think beyond the casino doors. There are exceptions, of course, such as the Sault Ste. Marie Ojibwe (Michigan), who operate over thirty different businesses. I believe state governments will be directly competing with tribes in the gaming industry and that the revenue stream will slowly decline. Tribes should look elsewhere for opportunities.
Tribes have a very special tax status in the United States. Pharmaceutical corporations go to Puerto Rico, where they have a preferable tax status. I would like to see tribal governments trying to bring that kind of business to reservations. It would generate numerous jobs, and most of those jobs would pay well. It would also enable tribes to diversify their business investments.
Many tribes are trying to expand their business models outside the gaming industry in ways that support cultural practices. Red Lake Fisheries (Minnesota) manages and processes fish harvested in tribal waters.
There’s much more to improving the economic well-being of an entire people than a sound business plan. America remains the richest nation on earth, but its citizens have not all been rewarded equally. Wealthy tribal nations have not always succeeded in raising the standard of living for all of their citizens, either. In addition to a sound business plan with a diversified array of enterprises, tribal governments should provide strategic assistance with education, health care, and housing to augment state and federal programs. They need not provide direct handouts but should give support that incentivizes healthy living and self-sufficiency.
There is an entitlement mentality in Indian country that I see as a problem. At Leech Lake (Minnesota), for example, the tribe pays for all band member funerals. While the assistance is welcome and expected by all tribal members, that benefit uses up so much tribal revenue that it hinders the ability of the tribe to provide other services. It would be political suicide for anyone in the tribal government to stop that program. But support for health, education, language, and culture programs is even more important. Many entitlements are extended for all tribal members, not just those in financial need. What seems fair actually deprives some tribes of resources to help those who need it most. Many other tribes make similar decisions with their money. And while the federal government treated Indians unfairly in many different ways, we cannot afford to sit around and complain about it. We need to do something about it.