Oklahoma Tax Comm'n v. Chickasaw Nation, 515 U.S. 450 (1995)

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certiorari to the united states court of appeals for the tenth circuit

No. 94-771. Argued April 24, 1995—Decided June 14, 1995

Respondent Chickasaw Nation (Tribe) filed this action to stop Oklahoma from enforcing several state taxes against the Tribe and its members. Pertinent here, the District Court held for the State on the motor fuels tax question, and largely for the Tribe on the income tax issue. The Court of Appeals ruled for the Tribe and its members on both issues, determining: (1) that, without congressional authorization, the State could not impose a motor fuels tax on fuel sold by the Tribe at its retail stores on tribal trust land; and (2) that the State could not tax the wages of tribal members employed by the Tribe, even if they reside outside Indian country.

Held: 1. Oklahoma may not apply its motor fuels tax, as currently designed, to fuel sold by the Tribe in Indian country. Pp. 455-462. (a) The Court declines to address the State's argument, raised for the first time in its brief on the merits, that the Hayden-Cartwright Act expressly authorizes States to tax motor fuel sales on Indian reservations. Pp. 456-457. (b) When a State attempts to levy a tax directly on Indian tribes or their members inside Indian country, the proper approach is not, as the State contends, to weigh the relevant state and tribal interests. Rather, a more categorical approach should be employed: Absent clear congressional authorization, a State is without power to tax reservation lands and reservation Indians. The initial and frequently dispositive question in Indian tax cases, therefore, is who bears the legal incidence of the tax, for if it is a tribe or tribal members inside Indian country, the tax cannot be enforced absent federal legislation permitting the im-post. The inquiry proper in this case is whether the fuels tax rests on the Tribe as retailer, or on the wholesaler who sells to the Tribe or the consumer who buys from the Tribe. Judicial focus on legal incidence accords due deference to Congress' lead role in evaluating state taxation as it bears on Indian tribes and tribal members. A "legal incidence" test, furthermore, provides a reasonably bright-line standard accommodating the reality that tax administration requires predictability. And

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