McClanahan v. Arizona State Tax Commission
1973 U.S. LEXIS 89, 411 U.S. 164, 36 L. Ed. 2d 129 (1973)
Rule of Law:
A state may not impose a personal income tax on a reservation Native American whose income is derived exclusively from sources within the reservation, as such a tax is preempted by federal treaties and statutes.
Facts:
- Rosalind McClanahan is an enrolled member of the Navajo tribe.
- McClanahan lives on the portion of the Navajo Reservation located within the State of Arizona.
- During the tax year 1967, all of McClanahan's income was derived from sources within the Navajo Reservation.
- Pursuant to an Arizona state statute, $16.20 was withheld from McClanahan's wages to cover her state income tax liability.
- McClanahan filed a protest against the collection of the tax and a claim for a full refund of the amount withheld.
Procedural Posture:
- Rosalind McClanahan sued the Arizona State Tax Commission in Arizona Superior Court, seeking a refund and a declaration that the tax was unlawful.
- The Arizona Superior Court (trial court) dismissed the action for failure to state a claim.
- McClanahan, as appellant, appealed to the Arizona Court of Appeals.
- The Arizona Court of Appeals affirmed the trial court's dismissal.
- McClanahan petitioned the Arizona Supreme Court for review, but the petition was denied.
- McClanahan then appealed to the Supreme Court of the United States, which noted probable jurisdiction.
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Issue:
Does a state have the legal authority to impose a personal income tax on a member of a Native American tribe for income earned exclusively on that tribe's reservation?
Opinions:
Majority - Mr. Justice Marshall
No. A state lacks jurisdiction to impose an income tax on a reservation tribal member whose income is earned solely on the reservation. This tax is unlawful because it interferes with matters that the relevant treaty and statutes leave to the exclusive province of the Federal Government and the tribe. The Court's reasoning rests on the historical backdrop of tribal sovereignty established in cases like Worcester v. Georgia, which treated reservations as distinct political communities where state law has no force. The Navajo Treaty of 1868 set aside the reservation for the 'exclusive use and occupation' of the Navajo people. Furthermore, the Arizona Enabling Act, under which Arizona became a state, explicitly disclaimed state jurisdiction over Indian lands. Federal statutes, such as the Buck Act, also indicate a congressional intent to exempt reservation Indians from state taxes, demonstrating that state authority is preempted unless Congress expressly permits it.
Analysis:
This decision solidifies the modern framework for analyzing state jurisdiction over tribal members on reservations, shifting the focus from inherent tribal sovereignty to federal preemption. By looking at treaties and federal statutes, the Court established a strong presumption against state authority over on-reservation activities unless Congress has explicitly authorized such jurisdiction. This case provides a clear, categorical bar to state income taxation of reservation members for on-reservation income, reinforcing the unique political status of tribes and limiting state encroachment on tribal self-governance. It distinguishes the infringement test from Williams v. Lee, making it clear that when an activity involves only tribal members on a reservation, the primary inquiry is one of federal preemption, not whether the state action interferes with tribal self-government.
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