Skip to main content

Details in N.Y. tax bill undercut gains

  • Author:
  • Updated:

HOGANSBURG, N.Y. - "Nothing has changed," a former leader of Mohawk tax
protests said about the framework for state tax negotiations to which St.
Regis Tribal Council leaders agreed when they signed a land claims
settlement last month with New York state Gov. George Pataki.

The same issues mark the land claims settlement bill that Pataki has
introduced in the state Legislature and will take to the U.S. Congress.

The issues may be deferred as attention focuses on a land settlement which
would double the size of the reservation and on a casino compact which
would finally move forward a long-delayed and potentially lucrative project
in the Catskills region.

The debate, weighing sovereignty against casino profit, is bound to come to
the fore as the tribal government negotiates a "trade agreement" with the

The negotiations are part of Pataki's Program Bill 06, which strives for
global settlements with five tribes, three of them from out of state.
Although presented primarily as a land claims settlement, the bulk of the
bill's 28 pages deal with tax collections. The core of the deal, for all
five tribes, is to allow state and local taxation at the off-reservation
casinos in return for "parity agreements" covering tribal lands.

The deal is seductive, since the parity agreements appear to end state
attempts to collect taxes from all reservation sales, even to non-Indians,
and the Catskills casinos would be cash cows far removed from traditional
territory. But the fine print shows no more regard for the principle of
tribal sovereignty then earlier attempts to collect taxes. The policy is
still grounded in the 1994 Supreme Court Attea decision.

The last decade of Indian protests in New York started June 13, 1994, when
the Supreme Court gave the state's Department of Taxation and Finance a big
win in its suit against cigarette wholesaler Milhelm Attea & Brothers, Inc.
The grounds were surprisingly narrow. Attea held a BIA license to deal with
reservations and argued that state cigarette tax regulations were preempted
by the federal Indian Trade Statutes. The court ruled that New York's
scheme wasn't an excessive burden and that it furthered the state interest
in taxing sales to non-Indians.

Scroll to Continue

Read More

Tribal members felt otherwise, and when their protests turned violent in
May 1997, the state backed off. It tucked its regulations away in the
Taxation and Finance back rooms, but it didn't forget them. When the
convenience store and gas station lobby turned up the heat on the
legislature, Pataki's bureaucrats dusted them off, and they are still
working on them today, even while Pataki is pushing the idea of trade
agreement negotiations.

The basic assumption of Attea was that even though tribal immunity to state
taxation was a bedrock principle of sovereignty, it only applied to tribal
members. The same wording shows up in Program Bill 06: the bill requires
tribes to collect and remit state and local taxes on all sales at casinos
"to non-members of such tribe or nation." In other words, if a Mohawk buys
cigarettes at a casino owned by the Cayugas (and presumably located on land
taken into trust for the Cayugas), he would have to pay state and local

Furthermore, the state would monitor the parity agreements on tribal lands.
Even cigarettes exempted from the state sales tax would bear a state stamp.
The state tax commissioner would promulgate rules and mechanisms to
implement the exemption, including "the mutual exchange of information"
(likely to be a one-way exchange) with tribal governments. There is no
principled recognition of sovereignty, since big-ticket items like cars or
boats would not be exempt.

And the tribe would wind up paying anyway. The bill would reimburse
neighboring counties for any lost tax revenues out of revenue sharing from
casino slot machines.

It remains to be seen whether even these concessions will survive a
skeptical state Legislature. (According to New York City tabloids, House
Speaker Sheldon Silver is already bad-mouthing Pataki as a "'nasty'
double-crosser.") But the grounds might be shifting in the federal courts
to favor the tribes.

Recent decisions, including the portentous Lara case, suggest that at least
some Supreme Court associate justices have recognized that restricting
sovereignty only to tribal members would create "administrative chaos," to
borrow a phrase out of context from Justice Antonin Scalia. Some have
conceded openly that it has to apply to tribal territory as well. Tax
decisions, even the much maligned Atkinson v. Shirley, have invoked Chief
Justice John Marshall's principle, "the power to tax involves the power to

This trend can be encouraged with displays of tribal competence and
ingenious negotiations with state governments. But it requires Indian
country to stand firm on sovereignty, which means little if it doesn't
include taxation.