Washington v. Confederated Tribes of the Colville Indian Reservation
1980 U.S. LEXIS 16, 447 U.S. 134, 65 L. Ed. 2d 10 (1980)
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Rule of Law:
A state may impose its nondiscriminatory sales and cigarette taxes on on-reservation transactions between Indian retailers and non-tribal purchasers, even when the tribe also imposes its own tax, as federal law does not authorize tribes to market a tax exemption to non-members.
Facts:
- The State of Washington imposes a cigarette excise tax and a general retail sales tax on sales within the state.
- The Confederated Tribes of the Colville Reservation, the Makah Tribe, the Lummi Tribe, and the Yakima Tribe are federally recognized sovereign tribes.
- The Tribes enacted ordinances establishing on-reservation tobacco outlets ('smokeshops') and imposing their own tribal taxes on cigarette sales.
- The Tribes used revenues from their cigarette enterprises and taxes to fund essential governmental services for their members.
- The tribal smokeshops' business model depended on selling cigarettes at prices lower than off-reservation retailers by not charging state taxes.
- A large majority of the smokeshops' customers were non-Indians who traveled to the reservations specifically to purchase tax-exempt cigarettes.
- Washington sought to enforce its taxes on these sales to non-members by, among other things, seizing unstamped cigarettes that were in transit to the reservations.
- Washington also sought to impose its annual motor vehicle excise tax on vehicles owned by tribal members residing on the reservations, which were used both on and off the reservation.
Procedural Posture:
- The Confederated Tribes of the Colville Reservation, Makah Tribe, and Lummi Tribe filed suit against the State of Washington in the U.S. District Court for the Eastern District of Washington.
- The United States, on behalf of the Yakima Tribe, filed a separate, similar suit in the same court.
- The plaintiffs sought declaratory judgments and injunctions to prevent the state from enforcing its cigarette, sales, and vehicle taxes against on-reservation businesses and tribal members.
- Because the plaintiffs sought to enjoin state statutes on constitutional grounds, a three-judge District Court was convened.
- The District Court granted preliminary injunctions against the state's enforcement of the challenged taxes.
- After a consolidated trial, the District Court ruled in favor of the Tribes on the cigarette tax issue, holding it was preempted by tribal taxing ordinances.
- The District Court also ruled the state's vehicle excise taxes were impermissible as applied to vehicles owned by the Tribes and their members.
- The State of Washington filed a direct appeal of the District Court's judgment to the Supreme Court of the United States.
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Issue:
Does federal law, the principle of tribal self-government, or the Indian Commerce Clause preempt a state's authority to impose its sales and cigarette taxes on on-reservation transactions between Indian retailers and non-tribal purchasers, when the tribe has imposed its own tax on the same sales?
Opinions:
Majority - Mr. Justice White
No. The state's imposition of its cigarette and sales taxes on purchases by non-tribal members is not preempted by federal law or tribal sovereignty. While Indian tribes retain the inherent power to tax on-reservation transactions, this authority is concurrent with the state's authority to tax the same transactions when they involve non-members. The court reasoned that the value being marketed by the tribal smokeshops was not value generated on the reservation, but rather an exemption from state taxation. Federal law does not authorize tribes to market a tax exemption to non-members who receive state services and would otherwise conduct their business elsewhere. The state may also impose minimal burdens on tribal retailers, such as record-keeping and affixing tax stamps, to aid in the collection of its valid tax. The state's taxing power also extends to sales made to Indians who are resident on the reservation but are not members of the governing tribe. However, the state's motor vehicle excise tax, which functions identically to a personal property tax, is invalid as applied to vehicles of tribal members residing on the reservation, per the precedent in Moe.
Concurring-in-part-and-dissenting-in-part - Mr. Justice Brennan
Yes. The state's taxing scheme should be invalidated because it undermines the Tribes' sovereign authority and conflicts with federally-sanctioned tribal activities. Unlike in Moe, the Tribes here are not just private retailers but are acting as governments by taxing and regulating commerce to fund essential services, an activity federal policy expressly encourages. The state tax creates a direct conflict with tribal self-government by forcing Tribes into an untenable choice: either impose their own tax and become uncompetitive, or forgo necessary governmental revenue to remain competitive. This state-imposed conflict impermissibly infringes on the Tribes' right 'to make their own laws and be ruled by them.'
Concurring-in-part-and-dissenting-in-part - Mr. Justice Stewart
Partially. The State of Washington cannot impose the full measure of its cigarette and sales taxes without giving a credit for the taxes paid to the tribe. Both the state and the tribes have the power to tax these on-reservation sales to non-members. To accommodate both sovereigns, congressional policy and the Indian Commerce Clause require the state to credit the tribal tax against its own. This approach allows the state to prevent non-members from avoiding taxes while still permitting the tribe to raise revenue without putting its federally encouraged enterprises at a competitive disadvantage. This credit should apply where the tribal tax is passed on to the consumer (Colville, Lummi, and Makah), but not where it is structured as a wholesale tax (Yakima).
Concurring-in-part-and-dissenting-in-part - Mr. Justice Rehnquist
No. The validity of the state tax should be resolved through a preemption analysis based on congressional intent, not a balancing of state and tribal interests. The historical tradition of sovereignty does not grant tribes immunity from state taxes on the on-reservation activities of non-Indians. Since there is no traditional immunity, the state tax is valid unless Congress has expressly preempted it. Congress has not done so. The state's tax is a permissible, nondiscriminatory exercise of its authority. However, the Court erred in invalidating the vehicle tax; the issue should be remanded to determine if the tax is imposed for off-reservation use, which would be permissible.
Analysis:
This landmark decision clarifies the doctrine of concurrent taxing jurisdiction between states and tribes. It establishes that while tribes possess sovereign taxing authority, that power does not automatically oust a state's power to tax on-reservation activities of non-members. By holding that tribes cannot 'market an exemption' from state taxes, the Court significantly limited the ability of tribes to use tax advantages to generate economic development from non-member customers. The decision affirmed that a state's interest in applying its tax laws uniformly to its non-Indian citizens is compelling enough to override the negative economic impact on tribal enterprises, setting a crucial precedent for state-tribal jurisdictional disputes over commerce and taxation.
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