If an Indian tribe buys a prime piece of real estate in order to build a hotel or casino, it's automatically taken off the tax roll. But maybe it shouldn't be.
The Supreme Court wrestled with that question this week in a dispute between a county and Indian tribe in Minnesota. The tribe contends that land it buys isn't taxable even if it isn't put into trust with the federal government, a process that requires federal officials to consider the impact on local governments.
Tribes "ought to buy up all the land in sight," says Justice Antonin Scalia. "They have a great advantage over other landowners. They don't have to pay taxes."
The case stems from Cass County's attempt to keep $64,000 in taxes that the Leech Lake Band of Chippewa paid under protest on land it bought for a casino and other uses in north central Minnesota.
Thirteen states and more than a dozen county governments filed arguments with the Supreme Court backing Cass County. The Justice Department sided with the Leech Lake band, along with other tribes around the country.
Barbara McDowell, a Justice Department lawyer, says governments can't tax tribal property without authority from Congress. "It's impossible to tell here what Congress intended for land that came back into the hands of the tribe."
Cass County contends that any land that a tribe can freely sell is taxable; trust lands cannot be sold without the Interior Department's approval.
Also in Minnesota, Gov. Arne Carlson is fighting an attempt by the Shakopee Mdewakanton Dakota Community to put 593 acres of land into trust in Shakopee, a Minneapolis suburb. In New Mexico, a tribe is fighting the state's effort to tax land that the tribe leased to non-Indians.
A decision is expected by late June or July.