Select Page

Taxation of American Indians
University of Connecticut School of Law
Pomp, Richard D.

Pomp – Indian Tax – Spring 2009
[…] = questions
[…] = confusion
I.   THE INDIAN COMMERCE CLAUSE: When the Constitutional Convention met for the first time on May 25, 1787, relations with the Indians were chaotic, primarily because of state intrusions into the area of Indian affairs. Initial plans ignored the “Indian problem” but by August 1787 a committee of the Continental Congress cited the litany of problems between the states and the Indians and recommended vesting complete and undivided control over the Indians with the federal government. The committee essentially recommended that Congress be authorized to regulate trade, make treaties, and prevent intrusions on the Indian lands. These powers were formerly vested in the King so it made sense that one unified body should hold them.
A.EARLIEST VERSION OF ICC: Fifteen days after the committee reported, Madison suggested that Congress be given the power “[t]o regulate affairs with the Indians, as well within as without the limits of the United States,” which apparently is the earliest version of what was to become the Indian Commerce Clause. Four days later, the committee of detail suggested adding to the already drafted Commerce and Foreign Commerce Clause “[commerce] with Indians, within the limits of any state, not subject to the law thereof.”  
B. WHAT THE MODERN INDIAN CC TELLS US: Three things: 1) the contemporary phrasing is narrower than Madison’s proposal because it substituted “commerce with Indians” for “affairs with the Indians.” The latter was the language used in Article IX of the Articles of Confederation and in numerous treaties with the Indians. 2) The Interstate Commerce Clause refers to “commerce among the states,” and the Foreign Commerce Clause refers to “commerce with foreign nations” thus suggesting that the Indians were viewed more as foreign nations than as states. 3) The use of “with” instead of “among” suggests that the Founders made no claim to regulating commerce between one tribe and another. Unfortunately, no record of the proceedings addresses any of these points or explains why Madison’s proposal was changed.
1.       NO EXPLANATION:for dropping Madison’s proposed “within the limits of any state, not subject to the law thereof” but it quite obviously would have reintroduced the problems associated with Article IX, and it’s also puzzling why “with the Indian tribes” was substituted for “with the Indians” but it seems to suggest that the tribes (rather than members of those tribes) should be treated like nations, but the Court ejected this interpretation in U.S. v. Holliday. 
C.POINT: despite the similarity in phrasing and grammatical construction between the interstate CC and Indian CC, the Indian CC has its own unique history, was separately dealt with by the Founders, emerged at a different time during the Constitutional Convention, and was not intended to be interpreted in pari materia with the other two provisions. The conclusion seems inescapable that the Framers intended the Indian Commerce Clause to remove all doubt about the location of authority over Indian commerce: the states were excluded.  
II.       THE EARLY CASES: The Cherokees did everything the government expected of them: they became farmers and gave up the hunter-gatherer type of communal land use that was typical, they had a written language, a newspaper, and they became Christians. So of all the tribes to view as a group of savages this was a pretty ironic choice. GEORGIA HISTORY: is caught up in gold; there was a good deal of mining there then. Cotton played a role as well; it exhausted the soil and no one rotated crops in those days so this created a need to push westward to find more land. The development of the cotton gin only exacerbated the problem;   we needed more land and the Indians were in the way. Because the Indians did not make good slaves they remained a problem (the Louisiana Purchase was, in part, meant to get land to dump the Indians on). THE POWERS THAT WERE: President Jackson didn’t make it any easier for the Indians.  He was arch enemies with Worcester and Butler’s attorney. Chief Justice Marshall was failing in health so he was unable to do the type of arm-twisting he needed to do and the other justices started going in their own directions. Most of the earlier Marshall Court opinions were unanimous or very close (the Court in those days all lived together in a boarding house and took their meals together; there was a sense of comradery). But this unity began to break down during this period. At the same time, however, Marshall encouraged the dissents because he felt that the public would be on his side if he could get the issues out there. Marshall grew up in Virginia, on the frontier, so he saw a lot of the violence of the Indian conflicts; in his personal writings he thought of the Indians as savages but he is largely considered to be a friend of the early Indian cause. Cherokee: The case spends all this time on a lot of flowery eloquence but then ultimately just says, no, Indians are not a foreign state so we have no jurisdiction over you. Worcester: suffers from the same problem, much of the front-end of the case has nothing to do with its holding. What Marshall doesn’t flush out is Article 25 of the Judiciary Act (very controversial) which gave the Court jurisdiction only if there were conflicts. Pomp: thinks Marshall was saying I don’t think I can justify getting involved here if the only way I can is by saying that the Indians are sovereigns because I’m not sure there is even a conflict here. About 95% is about sovereignty but the last two pages try to tie it to the Constitution and treaties. The jurisdiction of the US Supreme Court was a hot issue back then. WHAT THE CASES REALLY STAND FOR: Pomp says the cases come to be read for the notion of the sovereignty of the Indian nations but Pomp doesn’t think this is the holding of either of the cases. Worcester is really just the Court saying that Georgia needs to stay out of this because the ICC gives the federal government exclusive jurisdiction. Yet somehow this case comes to be read for the notion of sovereignty. Indian scholars are no fan of the ICC because it is a source of power for the feds over the Indians. THE EMASCULATED PRE-EMPTION (NEGATIVE) THEORY OF THE ICC: Unfortunately over time the ICC has been emasculated and lost the pre-emptive power that it once had; hence, states are able to interfere more with Indian matters. Chief Justice Marshall would have laughed out the state levying a sales tax against the Indian tribes—but we’ll see that the States can do this now and there is a great deal that the States get away with that they may not have under a proper reading of Worcester. It’s one of the most cited cases from the Marshall Court and it is almost, probably, exclusively cited for the sovereignty idea rather than the pre-emptive idea. Judges have a limited attention span and how much time do you want to waste on the historical issue if you don’t think it’s going to work—the idea that the federal government doesn’t have jurisdiction isn’t going to work; you’d have to be an ideologue to go for this. 
A.     CHEROKEE v. GEORGIA (US 1831): Cherokee nation wanted an injunction restraining Georgia from executing certain laws (Georgia annulled all of the Cherokee laws, seized their lands some of which was put up for lottery) that aimed to destroy the Cherokee political society, and to seize the lands given to the Cherokees by the United States in prior treaties. 
Issue: Does the Court have jurisdiction under Article III, Section 2 of the Constitution; is the Cherokee nation a foreign state in the sense in which that term is used in the constitution?  
Tribe Argued: Historically, we have been treated as a state, as a distinct political society, separate from others, capable of self-management and governance, numerous treaties have been made with the U.S. recognizing our capability for maintaining peace and war. (But then it says that the counsel has shown that they are not a state of the Union, so they go for the foreign state argument; not owing allegiance to the U.S.) 
Holding: (Marshall) No, the tribe cannot sue in the federal courts, it is a domestic dependent nation, not a foreign nation so it does not have original jurisdiction.[1]  
Class:“Domestic dependent nation” only cited eight times in later cases, no mention of it at all in Worcester. Not a very helpful phrase. 
·         The States can be sued in the Supreme Court (third article of Constitution covers cases and controversies between a state or the citizens thereof, and foreign states, citizens, or subjects, and a subsequent clause gives the Court original jurisdiction in all cases where the state is a party)
·         But the tribe cannot be a party in federal courts (this was changed in 1875 for certain federal issues, and today a tribe can sue in federal court to enforce its treaty rights).
o   In any attempt at intercourse between Indians and foreign nations, the Indians are considered as within the jurisdictional limits of the United States, subject to many of those restraints which are imposed upon our own citizens.
§ Pomp: Marshall doesn’t list or articulate these though. 
o   Tribes acknowledge themselves in their treaties to be under the protection of the US; they admit that the US shall have the sole and exclusive right of regulating the trade with them and managing all their affairs. 
§ The Cherokees in particular, were allowed by the treaty of Hopewell, which preceded the constitution, “to send a deputy of their choice, whenever they think fit, to congress.”
·         Pomp: this has not been repealed.  Furthermore, you don’t make a treaty with anything but a foreign independent political body, otherwise we would just pass a statute, so these treaties implicitly recognize the sovereignty of the Indian tribes. But this isn’t good enough because the constitution talks about a foreign state, so Marshall claims that the Indians tribes could be a state but not a foreign one. Because they are within our boundaries we don’t consider them foreign.      
o   Meanwhile they are in a state of pupilage. Their relation to the US resembles that of a ward to his guardian.
§ Pomp: wait, but you just called them a domestic dependent nation, sounds like Marshall is trying to have it both ways, these comments are denigrating; but this later comes to be recognized as a type of fiduciary relationship—a silver lining for the Indians.   
o   They look to our government for protection—Pomp: yeah, only because we decimated them—they address the president as their great father, and they are considered by foreign nations and ourselves as so completely under US dominion that any attempt to acquire their lands, or to form a political connection to them would be considered by all as an invasion of US territory and an act of hostility. 
The Framers were not thinking of the Indian tribes when they opened the courts to controversies between a state or the citizens thereof, and foreign states. Pomp: agrees with this. 
The Indians probably didn’t think they would have access to the courts under the Constitution and this might explain why the framers omitted the Indians in their enumeration of the parties that might sue in the courts of the union.
 Pomp: this is a non sequitur, foreign nations might appeal to our government too.
The separation of foreign nations from Indian tribes in the Commerce Clause shows that Congress while respecting the distinct nature of the tribes did not, however, consider them to be a foreign state.
Pomp: Indian CC handout shows that the foreign and interstate CC were adopted prior to the Indian CC and that this was just a convenient place to tag it on to, that’s why it is last. Good evidence that when forming this article the Conve

ble to the Indians on the Navajo Reservation, thus it is unnecessary to consider whether the tax is barred by the ICC.[10]  
·         Since the beginning, the Federal Gov’t has permitted the Indians to govern themselves free from state interference:
o   See footnote 3:The Enabling Acts included in agreements admitting the western states to the Union on the condition that the states forever disclaim all rights and title to the lands lying within the boundaries of the Indians or Indian tribes.[11] 
·         Application of the tax would conflict with the Court’s understanding of past acts regulating trade with the Indians:
These treat the Indians as nations and respect their rights, see
[1]Why they Went for Original Jurisdiction: Represented by former Attorney General William Wirt, the Cherokees challenged Georgia in the federal courts. However, the only path to federal court at that time was diversity jurisdiction, available only to American citizens and foreign citizens and nations. The Cherokees were not American citizens, so Wirt decided to file an original bill in the U.S. Supreme Court claiming to be a foreign nation and seeking judicial enforcement of the Cherokees’ treaties with the United States.
[2] This comes to be known as “the Story Dissent” even though it is written by Thompson
[3] The decision came out four days after oral argument, there was a new presidency of Jackson tied up in it and the Removal Act, so there was a lot riding on it. Almost the entire opinion has little to do with what actually happened, it all speaks to the Cherokee. Pomp gets the impression that this is what Marshall wanted to do in the previous case but was unable to given its very tenuous position. So now he gets his chance to do it right. 
[4] Funny, Marshall came up with this “dependent domestic nation” phrase and then a year later he doesn’t even use it. He must have come under a great deal of criticism so now he just uses a “distinct” phrase. 
[5] “Right of Soil” used to refer to those born in the US naturally and receiving rights accordingly. Questions about whether John McCain could run for the office of president because he was not naturally born and therefore did not possess the requisite right of soil. 
[6] Pomp really hates that the Supreme Court refers to this tax as a “state tax on gross income” even though it was a harmless mistake here it just makes the Court look bad. This is clearly just a retail sales tax. Gross income is a federal concept, flushed out in § 61 of the IRC. If this were a tax on gross income then Warren Trading would get a deduction for the costs of goods sold—purchase for resale exemption.   
[7] The holding wouldn’t be any different if they hadn’t gotten a license, nothing turns on this. It would be silly if we could circumvent the statute that way. Today, not a lot of people know about these statutes; there are a lot of unlicensed traders and the issue is never raised—it’s as if the statute has just been ignored. ALEX’s Experience: “bureaucratic nonfeasance” will excuse one from getting a federal trader statute. You really can’t even get the license anymore. They tell you to deal directly with the tribe. It’s a criminal offense not to have the license, but the BIA couldn’t care less so we can certainly excuse Central Machines for not having the license in the next case. 
[8] Doesn’t say whether Warren Trading is Indian owned or not. The fact that the court doesn’t specify this makes us think that it isn’t relevant. If the case turned on the Indian CC then in accordance with the “with” versus “among” distinction it may have been relevant, but this case didn’t turn on the ICC. 
[9] Warren Challengedon very narrow grounds (get judge’s comfort level up) limited to the State’s attempt to apply the tax to gross income from sales made on the reservation to reservation Indians. Pomp: what the Hell is a “reservation Indian”? Does this apply to an Indian on the reservation of another tribe via inter-tribal marriage? Who knows.        
[10] Avoid Constitutional questions wherever possible—not stated but implicit: notice-this would have required the Court to state whether taxes can be treated like regulations for negative Indian CC purposes; and we know that they can, see e.g., Tracy. 
[11] Enabling Act: the tribes entered the union on certain conditions specified under the enabling acts.   Many of the western states have these, sometimes the language is repeated in the state constitution; sometimes it is not. In some cases, the language of the enabling act will be dispositive—tough to find, not something we look for out here in the east, they sometimes specified what kind of taxes will occur whereas out in the east we were relatively silent on the issue.