Appellants Brief — McClanahan v. Arizona Tax Comm'n

Gonstitutions, Treaty & Statutes

Act of August 15, 1953 (P.L. 280)

67 Stat. 588, Ch. 505, §§ 6,7

Alaska Enabling Act

we Stat. 339 |:

Arizona Constitution

Art. XX

Arizona Enabling Act

36 Stat 557, 569, 570

Page

22,23, 24,

25

18,19

3,4,5

(1910) 3,4,5,10,14,15

Arizona Revised Statutes

~ § 43-186 (d)A.2

§ 43-188 (f£)

Buck Act

54 Stat. 1059 (1940)

4U.S.C. 105-110 (1947)

General Allotment Act of 1887

24 Stat. 388

25 U.S.C. 331, et seq.

Indian Civil Rights Act of 1968

25 U.S.c. 1324

82 Stat. 79

25 U.S.C. 1326

82 Stat. 80

Montana Enabling Act

‘25 stat. 676

26

32

24,25:

17

New Mexico Enabling Act

-vii-

Gonstitutions, Treaty & Statutes Page

36 Stat. 557

North Dakota Enabling Act

25 Stat. 676

Treaty of June i. 1968

15 Stat. 667

25 U.S.C.

25 U.S.C.

25 U.S.C.

25. U.S.C.

25°U.S.C.

me U.S.C.

25 U.S.C.

mo U.8.C.

25 U.S.C.

so U.S.C.

25 U.S.C.

yo U.S.C.

2 U.S.C.

2.6 .C.

25 U.S.C.

25 U.S.C.

so U.S.C.

25 U.S.C.

25 U.S.C.

25 U.S.C.

25 U.S.C.

86

233

348

349

355

379

398

399

401

409a

412a

416i

465

487c

492

501

564c

608

610b

645

674

18

3, 16,29, 30

ll

11

1l

at

1l

11

1l

11

1l

1l

1l

11

11

ll

ll

11

11

11

11

1l

11

Miscellaneous

84 CONG. REC. 10685 (1939)

H.R. Rep. No. 848

83d Cong. lst Sess.

Letter dated July’7, 1953 to

The Honorable A. L. Miller from

Assistant Secretary of the Interior

1953 U.S. Code Congressional

and Administrative News 2409

2414

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1971

,NO. 71-834

ROSALIND MCCLANAHAN, on behalf of herself

and all-others similarly situated,

Appellant,

vs.

ARIZONA STATE TAX COMMISSION,

Appellee.

On Appeal from the Supreme Court of Arizona

BRIEF FOR APPELLEE

STATEMENT OF THE CASE

Rosalind McClanahan, appellant herein,

is a citizen of the United’ States and an en-

tolled member of the Navajo Tribe of Indians.

During the 1967 calendar year, the appellant

ati.

resided within the exterior boundaries of

the Navajo Indian Reservation, on that part

of the reservation which is in the State of

Arizona. The appellant's income during

1967 was wholly derived from sources within

the Navajo Indian Reservation. The total

amount of tax withheld from the appellant's

income pursuant to Ariz.Rev.Stat.Ann. § 43-

+(188(f) was $16.20. Thereafter the appel-

lant instituted a class action for refund

in the Superior Court of Arizona in and for

Apache County on June 17, 1969, pursuant to

_ Ariz.Rev.Stat.Ann. § 43-186 (d)A.2.

Appellee moved to dismiss on the grounds

that the complaint failed to state a claim

‘upon which relief could be granted. A.1.

“the appellee based its position on the fol-

Alewing premises: (1) the imposition of

this income tax does not interfere with the

<=

self government of the Navajo Tribe of In-

dians, (2) the Arizona Enabling Act, 36

Stat. 557, 570 (1910) and the Arizona Con-

stitution, Art. XX do not prohibit the State

of Arizona from taxing the income of In-

dians residing on a reservation; and (3)

the Giant ct 1868 between the United States

and the Navajo Tribe, 15 Stat. 667, does not

contain any provision that would prohibit

ee iniposition of the Arizona state income

tax on that part of the Navajo Indian Re-

‘servation within the boundaries of the

State of Arizona.

The appellant in responding to appel-

lee's assertions, contended that (1) absent

an act of Congress, Arizona has no power to

_tax appellant’s income; (2) imposition of

_ the tax interferes with powers essential to

he self government of the Navajo Tribe;

: gh

Sand (3) the Arizona Enabling Act and Art-

icle XX of the Arizona Constitution preclude

the State of Arizona from applying its in-

come tax laws to Indians residing on the

reservation.

A minute entry order was entered on

Stcher 16, 1969, granting the motion to

dismiss of the State of Arizona. Thereafter

the appellant filed a motion, dated October

22, 1969, for rehearing of order granting

motion to dismiss and an amended complaint

which appellant certified was mailed to the

appellee on November 4, 1969. The appellee

filed a motion to quash amended itabtdine

dated November 7, 1969. By minute entry

Rter of January 12, 1970, the Superior

court denied the appellant's motion for re-

hearing and ordered the striking and quash-

ing of the appellant's amended complaint.

os Site

The Superior Court's amended opinion

and order dismissed the appellant's com-

plaint on January 12, 1970, holding that the

State of Arizona did not require express

congressional duthority to tax appellant,

and that the income tax imposed and collec-

ted by appellee did not interfere with tri-

bal self government. A.6. The appellant

filed a timely notice of appeal to the

Court of Appeals of the State of Arizona.

The Court of Appeals affirmed the Sup-

erior Court's dismissal of the complaint on

April 28, 1971, holding that the Arizona in-

come tax did not infringe on the Navajo

fribe's right of self joverauhnnh: and that

the tax was not prohibited by the Arizona

- Bnabling Act (Sec. 20, 36 Stat. 569) and the

_ Arizona Constitution (Art. XX, Fourth).

‘lanahan v. State Tax Commission, 14 Ariz.

i “Sr

App. 452, 484 P.2d 221. On May 1l, 1971,

‘the appellant moved for a rehearing, which

was denied on June 8, 1971. The appellant

then filed a petition for review by the

Supreme Court of Arizona on June 22, 1971,

and that petition was denied on September 21,

1971. A.8.

The appellant filed the Notice of Ap-

peal to the Supreme Court of the United

bintes in the Superior Court, the court pos~

sessed of the record on October 4, 197% A.l.

The appellant secured an extension of time

to docket the appeal, which was due on

December 20, 1971, and the appeal was

docketed on December 23, 1971.

SUMMARY OF ARGUMENT

The residual jurisdiction of states on

ian reservations has been recognized in

mata

the rule that state laws may apply to In-

dians unless such application would inter-

fere with reservation self government or im<"

pair a right granted or reserved by. federal

law. epcnition of a state personal income

tax on residents of an Indian reservation,

including Indians, does not interfere with

reservation self government or impair any

right granted or reserved by federal law.

No act of Congress prohibits the im-

position of state income taxes on Indians

residing on Indian reservations cg creutes

any rights which would be impaired by imposi-

tion of a state income tax on the income of.

such Indians. The right of states to impose

such income taxes has been repeatedly recog-

nized. By reason of statehood Arizona has

_ the jurisdiction to impose its income tax

on Indian reservations and Arizona has

aus

never surrendered that jurisdiction.

The plain implication of the language

used in the rule referred to above of the

test of validity of state action is that

state jurisdiction on Indian reservations

does not depend upon express congressional

authorization. This rule recognizes the

power of Congres, the Indian right of self

government and the role of the state in

bridging gaps in the law applicable to In-

dian reservations. Accordingly, the deci-

sion of the Court of Appeals of Arizona

‘should be affirmed.

ARGUMENT

I. EXPRESS CONGRESSIONAL

AUTHORIZATION NOT ESSEN-

TIAL FOR VALIDITY OF

STATE ACTION

From the recent decisions in Williams

358 U.S. 217, 79 S.Ct. 269, 3 L.Ed.2d

aa

251 (1959); Organized Village of Kake v.

Egan, 369 U.S. 60, 82 S.Ct. 562, 7 L.Ed.2d

573 (1962) and Kennerly v. District Court

of Montana, 440 U.S. 423, 91 S.Ct. 480, 27

L.Ed.2d 507 (1971), it is now established

that the rule for determining validity of

state action in respect to Indian reserva~

tions is whether the action is prohibited

by a governing act of Congress or infringes

upon the Indian right of self government.

This test clearly indicates that there is

a residual state jurisdiction. This resi-

dual state jurisdiction is not authorized

by act of Congress. It exists by reason of

statehood. Because of this state jurisdic-

tion Enabling Act provisions of some states

reserved sufficient powers to Congress to

énable it to take appropriate action in the

. future in respect to matters of concern to

-~10—-

the federal government such as the proprie-

tary @Mterest of the Indians in Indian land.

From the case law and legislative his-

tory, it is evident that this rule for deter-

mining validity of state action completely

states the limitations on state action in

respect to Indian reservations. It was un-

doubtedly because congressional authoriza- —

tion of state action was not required by the

Act of June 20, 1910, 36 U.S. Stat. 557,

provided in Section 20 thereof that the lands

owned by Indian tribes would remain subject

to the disposition and under the absolute

jurisdiction and control of the Congress of

the United States. If express congressional

authorization had been a requirement, such

a provision would have neem completely

Tieréiucus.

Numerous acts of Congress prohibit

Piste taxation in respect to Indian reserva~

sions and nearly as many statutes authorize

1/

state taxation. Statutes authorizing

state taxation were necessary because the

property was formerly exempted from taxation

by state enabling acts or because it was

Steed states property or property of an in-

strumentality of the United States. This

statutory pattern of prohibiting state taxa-

tion in specific situations and authorizing

state taxation where it was previously pro-

lf The following sections of Title 25 pro-

~ hibit state taxation: 86 (1914), 233

(1950), 348 (1887), 409a (1931), 412a (1936),

465 (1934), 564c (1958), 416i (1966), 487c

41970), 492 (1970), 355 (1918). The follow-

ing sections of Title 25 authorize state

taxation: 349 (1887), 379 (1902), 398

(1929), 399 (1919), 401 (1924), 501 (1936),

“608 (1964), 674 (1953), 610b (1968) and

645 (1970).

’ : ~12-

hibitea by statute or judicial decision in-

dicates that during the past seventy years

congressional authorization of state taxa-

tion was not required.

Whenever, upon the admission of a state

into the Union, Congress intended to except

out of it an Indian reservation, or the sole

and exclusive jurisdiction over that reser-

vation, it has done so by express words.

United States v. McBratney, 104 U.S. 621,

26 L.Ed. 869 (1882). An example of a case

in which Indian lands were excluded from the

jurisdiction of the state by treaty and by

the subsequent act of Congress admitting

that state to the Union is Kansas Indians,

5 Wall. 737. More recent decisions indica-

ting congressional authorization of state

‘action is not required are New York v.

Martin, 326 U.S. 496, 90 L.Ed. 261 (1946),

~13-

in which the Court held that in the absence

of a limiting treaty obligation or congres-

sional enactment each state had a right to

exercise jurisdiction over Indian reserva-

’

tions within its boundaries and Warren

Trading Fost v. Arizona Tax Commission, 380

U.S. 685, 85 S.Ct. 1242, 14 L.Ed.2d 165

(1965), in which the Court held that Arizona

could not impose its transaction privilege

tax on sales by licensed Indian traders to

Indians because Congress had preempted the

regulation of Indian trading on reserva-

tions. If congressional authorization of

state taxation was required, it would not

have been necessary for the Court to have

decided the Warren Trading Fost case on the

ground of congressional preemption of the

field.

. Indian reservations constitute a sub-

-14-

stantial portion of the area of some states.

If Congress had intended that congressional

authorization was required in order for

states to impose taxes on Indian reservations

there would csvteiniy have been some express

language in some act of Congress that ex-

pressly provided for such an important limi-

tation on the states. In rejecting an ex-

clusive federal legislative authority argu-

ment in Silas Mason Company v. Tax Commis-

gion, 302 U.S. 186, 82 L.Ed. 187 (1937), the

court observed that while title to these

Indian lands had always been in the United

States, the state had never ceded exclusive

legislative authority to the united States.

The Washington Enabling Act provisions are

like those of Arizona. Neither the Arizona

Enabling Act, 36 U.S. Stat. 557, nor the

general pattern of the congressional acts

af Bue

pertaining to taxation of Indian lands, nor

the case law indicates that such a limita-

tion on state taxing power exists.

II. IMPOSITION OF ARIZONA

INCOME TAX DOES NOT

IMPAIR ANY RIGHTS

GRANTED OR RESERVED

BY FPEDERAL LAW

The Act of June 20, 1910, 36 U.S. Stat.

557, which provided for the sidmiéeton of

Arizona to the Union contained provisions

in Section 20 that the people of the pro-

posed state forever disclaim all right and

title to all lands lying within the boun-

daries of the state owned or held by any

Indian or Indian tribes, the right or title

to which shall have been acquired through

or from the United States or any prior sov-

ereignty, and that until the title of such

Indian or Indian tribe shall have been ex-

shed the same shall be and remain sub-

wi¢g«

ject to the disposition and under the abso-

lute jurisdiction and control of the United

States. It is apparent from the context of

the above provisions that the disclaimer

and the aisen ced jurisdiction and control

of the United States Congress both relate

to the proprietary interest in the land of

the Indian tribes.

The same paragraph of the Enabling Act

also prohibits the United States from taxing

such lands. If the words "absolute juris-

diction and control" were not used in such a

limited sense, then the provision relating

to taxes would be superfluous. It wouldn't

be necessary to prohibit the imposition of

state property taxes if the state had no

jurisdiction. The fact that the prohibi-

tion is limited to property taxes clearly

ote

to impose other taxes.

The limited scope of these Enabling

Act provisions is further indicated by sev-

eral cases. In Draper v. United States,

’

164 U.S. 240, 17 4. Ct tote 107 (1896), the

Court had occasion to consider the meaning

of the “absolute jurisdiction and control"

provision of the Montana Enabling Act, 25

Stat. 676. The Court concluded that this

restrictive language was used because it

was necessary in order to prevent any impli-

cation of state power to frustrate limita-

tions imposed by the laws of the United

States upon title to Indian lands which had

become extinct by allotment in severalty.

‘thus, the Court rejected the argument that

‘this language provided for exclusive juris-

‘diction in the federal government.

The meaning of this “absolute jurisdic-

i Bn

tion And control" provision in the Arizona

gnabling Act was considered in Porter v.

Hall, 34 Ariz. 308, 321, 271 P. 411 (1928),

and the court there concluded that this

language applies to Indian lands considered

as property and not as a territorial area

withdrawri’ from the sovereignty of the State

of Arizona. The meaning of the words

“absolute jurisdiction and control” in the

Alaska Enabling Act, 72 Stat. 339, was con-

sidered in Organized Village of Kake v. Egan

supra, and the Court concluded that these

words did not mean exclusive jurisdiction.

The same provisions of the North Dakota

Enabling Act, 25 Stat. 676, were construed

a ermillion v. Spotted tie 85 N.W.2d 432

(1957), and the court held that the reserva-

“tion of jurisdiction applied only to rights

> Indians in their lands and that the pur-

-19-

pose of the disclaimer was to safeguard the

interest of the Indians in their allotments.

The court had occasion to consider the mean-

ing of the disclaimer provision of the New

’

Mexico Enabling Act, 36 Stat. 557, in

Ghahate v. Bureau of Revenue, 80 N.M. 98,

451 P.2d 1002 (1969), and concluded that the

disclaimer was a disclaimer of proprietary

rather than governmental interest. In

Organized Village of Kake v. Egan, supra,

the Court concluded that the disclaimer pro-

vision in the Alaska Enabling Act, 72 Stat.

339, was a disclaimer of proprietary interest

The Limited meaning of the disclaimer

and “absolute jurisdiction and control"

Provisions of the Enabling Acts is indicated

by the Court's observation in Surplus Trad-

ang Co. v. Cook, 281 U. Ss. $4, 50 S.Ct. 455

oat

gito29), that state laws en the same force

=20=

‘on Indian reservations as elsewhere within

state limits except that they can only have

restricted application to the Indian wards.

Because of the residual nature of the state's

jurisdiction on Indian reservations, state

laws can only have limited application to

Miatens. As the cases previously cited

herein indicate, state laws cannot apply if

a governing law of Congress is applicable or

if the application of state laws would inter-

fere with the Indian right of self govern-

‘eent. These cases indicate that state en-

abling ask limitations such as those of the

State of Arizona do not prohibit the appli-

cation of a state income tax to Indian resi-

dents of an Indian reservation.

In 1953 Congress was advised by the

— Secretary of the Interior in

4 tter dated July 7, 1953 to The Honorable

s2hn

A. L. Miller, Chairman of the Committee on

Interior and Insular Affairs, House of Rep-

resentatives, that state enabling acts of

eertain states required the people of the

proposed states to include provisions in

their Constitution disclaiming jurisdiction

over Indian lands and providing that until

the Indian title was extinguished the lands

were to remain under the absolute jurisdic-

tion and control of Congress and that as a

consequence of these enabling acts and con-

stitutional provisions, Congress would have

to give its consent and the people of such

states would have to amend their Constitu-

tion before such states could legally assume

jurisdiction over Indian reservations. 1953

U.S. Code Congressional and Administrative

Hews, 2414.

It did not appear flom the Committee

=99=

reports that Congress was aware that the As--

sistant Secretary of the Interior's yiew of

the enabling act provisions ascribed a much

broader meaning to those provisions than

was Sisindiiy intenaes by the congressmen

who enacted them out of a concern for pro-

tecting the proprietary interest of the

Indians in their land and making certain

that the United States had sufficient power

to legislate in respect to its interests.

Shortly after receipt of the Assistant Sec-

retary's letter, Congress enacted legisla-

tion providing for consent of the United

States to acquisition of state jurisdiction.

67 Stat. 588, Ch. 505, §§ 6 and 7.

The two coordinate aims of this legis-

lation were (1) withdrawal of federal res-

ponsibility for Indian affairs wherever

eBtacticable and (2) termination of the objec-

whan

tion of Indians to federal laws applicable

to Indians as such. H.R. Rep. No. 848, 83d

Cong., lst Sess. 1953 U.S. Code Congres-

=

sional and Administrative News ,2409. Thus,

the legislators considered this legislation

was necessary for the purpose of termina-

tion ae federal responsibilities in respect

to Indian reservations rather than for the

purpose of. federal preemption of jurisdic-

‘son over the reservations. This narrow pur-

pose of P.L. 280, Act of August 15, 1953,

67 Stat. 588, was recognized in Vermillion

v. Spotted Elk, (North Dakota) supra, and

Ghahate v. Bureau of Revenue, supra. As

the Court noted in the Ghahate case, the

fact that New Mexico had not assumed juris-

diction over reservation Indians did not

indicate any withdrawal or loss of the juris-

@igtion recognized in Organized village of

-24-

Kake v. Egan, supra, and Williams v. Lee,

supra.

Under the Indian Civil Rights Act of

1968, 25 U.S. Code 1324, 82 Stat. 79, and

25 U.S. Code 1326, 82 Stat. 80, a procedure

was provided by which any states with en-

abling act and constitutional impediments

to assumption of civil and criminal juris-

@iction might remove such impediments by

amendment of their constitution and statutes

provided that state jurisdiction with res-

pect to criminal offenses or civil causes

of action would be applicable in pithain

country only where a majority of the Indians

woted to accept such jurisdiction. These

Provisions of the Indian Civil Rights Act

merely amended P.L. 280 to add a requirement

for, Indian approval of state assumption of

=25<

, fenses or civil causes of action.

i. The decision in Kennerly v. District

Court of Montana, supra, is not controlling

in this case because the question presented

to the Court there was solely a question of

the procedures by which the tribal consent

was obtained under the Indian Civil Rights

Act and the Court did not have occasion to

go into the question of the scope of the

Indian Civil Rights Act and residual state

jurisdiction. Furthermore; the case only

involved a question of jurisdiction of the

arts rather than the question of general

cenmental jurisdiction. In view of the

‘limited purpose of P.L. 280 and the Indian

civil Rights Act to provide a procedure for

moving enabling act and state constitu-

* onal impediments to state jurisdiction,

#86 laws do not bar the imposition of a

=

state income tax on incomes of Indian resi-

dents of an Indian reservation.

The appellant has contended that the

Buck Act, 54 Stat. 1059 (1940), reenacted

and codified as 4 U.S. Code 105-110 (1947),

is an Act of Congress which governs this

case. 4 U.S. Code 109 provides:

109 Same. Exception of Indians

Nothing in §§ 105 and 106 of this

title shall be deemed to authorize

the levy or collection of any tax

on or from any Indians not other-

wise taxed.

It was never intended that the Buck Act

should apply to Indian reservations and the

above quoted language was inserted after the

objections had been tlade by the Acting Sec-

retary of the Interior for the express pur-

pose of maintaining the status quo in res-

pect to Indian reservations. 84 CONG. REC.

10685 (1939). In Warren Trading Post v.

aes on

Arizona Tax Commission, supra, the Court

agreed that this legislation did not apply

to Indians. It cannot seriously be argued

that legislation which has no application

constitutes 4 kebtristion of state taxing

power. From the veveeeine analysis, it is

evident that no act of Congress prohibits

the State of Arizona from imposing its tieene

tax on the income of Indians residing on an

Indian reservation within the State ae that

imposition of the tax does not impair any

right granted under any act of Congress.

: III. IMPOSITION OF ARIZONA

INCOME TAXES DOES NOT

INFRINGE UPON INDIAN

RIGHT OF SELF GOVERN-

MENT

Cases involving state and federal re-

lations effectively define the right of self

government. These cases clearly indicate

that the imposition of Arizona's income tax

-28-

on Navajo residents of the servation would

not violate the right of self government of

the Navajo Tribe. States have been permitted

to tax employees of the federal government

on the theory that such taxation by the state

does not. constitute an undue interference

with the governmental activities of the fed-

eral government. Graves v. New York, 306

U.S. 466, 59 S.Ct. 595, 83 L.Ed. 927 (1938).

In Sims v. United States, 359 U.S. 108, 79

$.ct. 641, 3 L.Ed.2d 667 (1959), the Court

upheld an Invernal Revenue Service levy on

the salary of an employee of the State of

West Virginia. The levy was directed to the

State. Certainly the Navajo Tribe does not :

stand on a higher plane in respect to the

question of self government than the state

and federal governments. If states can im-

income taxes on federal employees, they

-29-

certainly don't violate the right of self

government of Indian tribes by imposing in- .

come taxes on members of Indian tribes re-

siding within the state.

Indians el subject to payment of fed-

eral income taxes as are other citizens, un-

less an exemption from taxation can be found

in the language of a treaty or 4n act of

Congress. Commissioner of Internal Revenue

v. Walker, 326 F.2d 261 (9th Cir. 1964). If

it doesn’t violate the tribal right of self

government for the federal government to im-

pose an income tax on Indians, it certainly

doesn't violate the right of self government

for the state to impose such a tax.

Imposition of the Arizona income tax on

residents of the Navajo Indidn Reservation

doesn't violate any provision of the Treaty

"with the Navajo Indians of June 1, 1868,

2

“|

-30—-

15 Stat. 667. Imposing a personal income

tax on residents of the reservation doesn't

impose any burden on the Navajo tribal gov-

ernment. Accordingly, by all of the stan-

dards .by which this question of infringement

on the right of self government has tradi-

tionally been considered, imposition of this

tax under the circumstances of this case on

Indian residents of the Navajo Reservation

doesn't infringe on the Navajo right of

self government.

IV. INDIAN RESIDENTS OF

NAVAJO RESERVATION

ARE SUBJECT TO STATE

INCOME TAX

Congress cannot have intended to impose

federal income and inheritance taxes on the

Indians and at the same time exempt them by

implication from similar state taxes. When

Congress wants to require non-taxability it

oh td

can, as it has so often done, say so expli-

citly. Oklahoma Tax Comm ‘n v. United States,

319 U.S. 598, 87 L.Ed. 1612 (1943). Treaties

and. statutes relating to the rights of me.

dians should fo liberally construed in their

evox. However, such principle comes into

play only if such statute or treaty contains

language which can reasonably be construed

to confer income exemptions. Holt v. Comm'r

of Int. Rev., 364 F.2d 38 (1966). As the

preceding portions of this brief have pointed

out, there is no treaty or statute which con-

tains language that can reasonably be con-

strued to confer state income tax exemptions

on the members of the Navajo Tribe residing

on the Navajo Reservation.

Indians are subject to the payment of

income taxes as are other citizens. Squire

4

4;

LHP

eman, 351 U.S. 1, 76 S.Ct. 611, 100

~32=

L.Ed. 883 (1956). Squire v. Capoeman is dis

tinguishable from this case because the

court held capital gains from the sale of

timber to be exempt from taxation under the

General Allotment Act.of 1887, 24 Stat. 388,

25 U.S. Code 331, et seq. This case involves

income from personal services rather than

property and the General Allotment Act has

ho application to this case. Imposition of

state income taxes on Indians has been up-

held in Leahy v. State Treas'r of Oklahoma,

297 U.S. 420, 56 S.Ct. 507, 80 L.Ed. 771

(1936) ; State Tax Comm'n v. W. L. Barnes,

178 N.Y.Supp.2d 932 (1958); Powless v. State

Tax Comm'n, 253 N.Y.Supp.2d 438 (1964), and

Ghahate v. Bureau of Revenue, supra. The

only case that our research disclosed hold-

ing a state could not impose an income tax

on Indian residents of an Indian reservation

for

a33=

js Comm'r of Taxation v. Brun, (Minn.) 147

N.W.2d 120 (1970).

In the Brun case the court based its

decision on the grounds that the state did

not have jurisdiction and that payment of

the taxes would interfere with the tribal

right of self government. Our arguments

against the Minnesota court's position are

set out in the earlier portions of the brief

pertaining to applicable federal legislation

and infringement on the right of self govern

ment. The Minnesota court was of the view

that the economic impact on the individual

tribal member constituted interference with

the right of tribal self government. Other

Services besides governmental services have

an economic impact and yet this sovereignty

‘Stgument is not considered a defense to

Miabirity for such services. The court also

HY Ve

‘noted that Minnesota had not established

that it provided benefits to these Indians

e

and, therefore, it had no reason to impose

any taxes.

,

As the Arizona Court of Appeals pointed

out in McClanahan v. State Tax Comm'n, 14

Ariz.App. 452, 456, 484 P.2d 221 (1971),

counsel for the appellant conceded during

oral argument that monies of the State of

Arizona were expended for education and wel-

fare within the confines of the Navajo Re-

servation and the Navajo Indians were the

beneficiaries of these expenditures. It

appeared that the Minnesota court merely

assumed that the economic impact on indivi-

dual tribe membeis would affect the tribal

right of self government. However, if the

pesota court was really convinced that

Kinnesots did not have jurisdiction, it

=35—

would not have had to consider the question

of whether the tax infringed on the tribal

right of self government.

In Leahy v. State Treas'r of Oklahoma,

supra, the court noted that federal income

taxes had been upheld in respect to the same

type of income and concluded that since Leahy

was entitled to the income and free to use

it as he saw fit, there was no reason why

such income should not also be taxable by

the state. Thus, the decisions of the state

and federal courts, with the exception of the

Brun case, supra, indicate that income of

Indians such as that in issue in this case

is subject to state income taxation.

V. SOME RAMIFICATIONS OF

APPELLANT'S POSITION

There are some fundamental contradic-

tions between the appellant's claim that

Pe

ee

”

-36-

states have only been allowed jurisdiction

on Indian reservations pursuant to express

congressional enactment and what has actuall

happened on the Navajo Reservation. It can

hardly be disputed that Arizona laws apply

on the Navajo Reservation for the purpose

of conferring all kinds of rights, privileges

and benefits on the Indian residents of the

reservation.

Reservation Indians have the right to

yote, Harrison v. Laveen, 67 Ariz. 337, 196

P.2d 456 (1948); the right to serve on a

jury, Denison v. State, 34 Ariz. 144, 268

P. 617 (1928); and a practically guaranteed

ieseentation in the Arizona House of Rep-

resentatives and Legislature, Klahr v.

Williams, 339 F.Supp. 922 (1972). When

@tates attempt to withhold benefits from

n reservations, they are forced to pro-

|

of public Welfare v. Bd. of Comm'rs, 262

dian participation in Arizona government

a

vide those benefits on the basis of the

claim that failure to do so would constitute

a denial of equal protection of the laws.

Begay v. Sawtelle, 53 Ariz. 304, 88 P.2d

999 (1939); Bradley v. Arizona Corp. Comm'n,

60 Ariz. 508, 141 P.2d 524 (1943); State Ba.

N.C. 475, 137 S.E.2d 801 (1964).

Thus, we see that Indians participate

in the government of the State of Arizona

and as counsel conceded in the oral argument

in the Arizona Court of Appeals receive eco-

nomic benefits from the State of Arizona.

Wow, does the appellant contend that the

State of Arizona has no power to permit In-

and provide these benefits or is it their

gontention. that the Indian residents of the

ervyation must receive all the benefits

=~3G~

of state citizenship, but none of the burde

of such citizenship can be imposed on them?

Many people in Arizona living off the

Indian reservations are in modest and poor

circumstances. It would certainly be a

denial of the equal protection of the laws

to exempt from all taxation a group that is

sufficiently numerous to have its own repre-

sentation in the Legislature while taxing

other people who are equally poor additional

amounts in order to pay for the governmental

benefits of the reservation Indians. Since

Brown v. Bd. of Education, 347 U.S. 483, 74

S.Ct. 686, 98 L.Ed. 873 (1954), a pragmatic

approach has been taken to equal protection

Qestions. The appellant argues in favor of

a system that would be grossly unequal and

iiteasonable.

In its amicus curiae brief the Solicitor

~ ioe

General refers to the vast amounts spent on

the Navajo Reservation by the United States

Government. We don't know how these amounts

compare with those spent by the State of

Arizona and we'don't think the tax liability

question turns on which government spends

the host, but the figures point out one of

the problems of Arizona's responsibilities.

Budget items are frequently increased, de-

creased and eliminated without any changes

in the general laws. When decreases or elim-

ination of some of these items occur, the

State of Arizona has the responsibility for

supplying the essential services that are re-

Quired. .Since the Navajo Reservation is

located in the State of Arizona, this State

has the ultimate responsibility. This prob-

lem is further aggravated by the fact that 2

the State of Arizona has an extremely narrow

: Ss

-40-

tax base because most of the land in Arizona

is owned by the United States and, thus, is

not subject to taxation.

If, as the appellant apparently contends

the residents of Indian reservations were a

privileged class who have all of the rights,

privileges and benefits of state government

and none of its burdens, it would be entirely

feasible for residents of Indian reserva-

tions located close to the metropolitan

areas of Tucson and Phoenix to capitalize

on the fact that they were operating out of

an advantageously located island of tax im-

munity by selling cigarettes, other items on

Which there are high state excise taxes and

large sales tax items such-as automobiles

and appliances at prices that would mean

tuinous competition for those engaged in

w

h businesses in the adjacent metropolitan

oni Ln

ee

“—S

areas. Nothing cited by the appellant in

any treaty or act of Congress including legis

lation to provide economic assistance to re-

servation Indians indicates that Congress

ever intended to provide for such a result

and self-determination of the Indian tribes

certainly doesn't require this kind of over-

protection to the extreme detriment of others.

CONCLUSION

Because of the logical, equitable and

legal reasons set out above, the judgment of

the Arizona Court of Appeals should be affirme

Respectfully submitted,

GARY K. NELSON

The Attorney General

of Arizona

JAMES D. WINTER

Assistant Attorney General

Attorneys for Appellee