Washington collected over $40 million in taxes from non-Indian businesses at Quil Ceda, while Tulalip collected none

Adam Crepelle

Nobody likes paying taxes, but at least the collecting government provides services to those from whom it collects. This is the dividing line between taxation and theft. Viewed in this light, it is hard to see state taxation of Indian reservation economic activity as anything other than theft. The recently decided Quil Ceda case illustrates this point.

The Tulalip Tribes transformed an undeveloped tract of land on its reservation into a bustling commercial center. Quil Ceda is no ordinary reservation enterprise—the tribe had it incorporated as a municipal subdivision granting it the same status as Washington, D.C. Moreover, Tulalip built the road to and provides all the governmental services within Quil Ceda. Nevertheless, the State of Washington and Snohomish County want to tax Quil Ceda.

Despite the state and county providing virtually nothing to Quil Ceda, the court upheld their taxes on Quil Ceda. The court’s path to its decision is troublesome. Quil Ceda's status as a federal municipality was glossed over, but this should have weighed heavily against the imposition of state and county taxes. Likewise, the court ruled states and counties have a stronger interest in taxing on reservation commerce than tribes.

Remarkably, the court used the Tulalip Leasing Act — which Congress enacted to give the Tulalip greater control over its reservation — as a sword against Tulalip. The court curiously reasoned that the federal regulatory rollback paved the way for greater state intrusion into tribal affairs. This makes no sense.

Tulalip's hands off approach to private business management was also used to justify state and county taxation. Neither the state nor county runs private businesses in their jurisdictions. Reservations often struggle to attract private businesses because tribal governments often seek an active role in their operation. Tulalip's embracing a laissez-faire approach to business aligns with the United States policy towards business as well as traditional tribal economic practices. A tribal government's choosing not to micromanage on reservation businesses should in no way justify state taxation.

Quil Ceda's financial success was another reason the court decided to uphold the state and county taxes. This begs the question, would the state and county taxes be invalid if Quil Ceda was in poor financial shape? The fact that Quil Ceda has been able to thrive in a state and county that are hostile to tribal interests is a testament to Tulalip leadership.

Although the state and county provide a miniscule amount of services to Quil Ceda, the court claimed that Quil Ceda benefits from the taxes because these governments provide schools, cops, and infrastructure off the reservation. People who shop and work at Quil Ceda benefit from these services; hence, the state and county taxes are warranted according to the court.

Abolitionist Lysander Spooner famously wrote the robber is nobler than government because the robber "does not pretend that he has any rightful claim to your money, or that he intends to use it for your own benefit." In 2015, Washington and Snohomish County collected over $40 million in taxes from non-Indian businesses at Quil Ceda while Tulalip — which provides all the municipal services — collected none. The Washington and Snohomish County levies at Quil Ceda fly across the line between taxation and theft.

Two solutions exist. One is Tulalip should assess taxes off the reservation. Following the court’s rationale, thousands of individuals would not be in Snohomish County but for the environment Tulalip has created. If the state and county can legitimately tax on reservation activity with a minimal nexus to either government, it is difficult to explain why Tulalip should not be able to tax off reservation commerce that is a direct result of Tulalip enterprise.

The other option is elect more American Indians to Congress. A record number of American Indians are seeking public office this November. More American Indians in Congress will help make the federal government realize that tribes are nations and not cash cows for states and counties.

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Adam Crepelle is an attorney and a visiting professor at Southern University Law Center. He is a member of the United Houma Nation and practices law in New Orleans.

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