The U.S. Supreme Court’s decision in McGirt v. Oklahoma expanded the land in the state now part of Indian reservations to about half of the state.
Many of those living on those reservations are not subject to state income taxes, Cherokee Nation Principal Chief Chuck Hoskin, Jr., pointed out recently. The decision significantly increased those numbers. He was speaking as part of a tax-and-budget panel hosted by the Oklahoma Policy Institute.
He said, “There’s nothing new about the law out there on the ability of a state to tax a member of a federally recognized tribe on a reservation.” He added, “What’s new of course is the scope of the reservation because of the McGirt case. So, we can look to existing law and we can see that taxation doesn’t attach to individual Native Americans who live on reservations.”
In the ruling the U.S. Supreme Court ruled that the Muscogee Nation reservation had never been disestablished. It later extended the ruling to reservations of the Choctaw, Chickasaw, Cherokee, Seminole, and Quapaw—about half of the state and about 2 million people. Of which 21 percent are estimated as tribal members and not subject to state income tax.
This territory takes in the eastern half of the state. This could cause “revenue gaps” for the state, said Hoskin.
The Oklahoma Tax Commission agrees. It recently estimated that it will lose $72.7 million annually from reduced income taxes and $132.2 million from reduced sales taxes.
Hoskins suggests that the tribes and state resolve this issue with tribal state compacts. He said, “Tax issues have been raised before in the context of Indian tribes. The tobacco-tax cases in the ‘80s and ‘90s, how were they resolved? They were resolved ultimately through agreement in which we share revenue.”
