Tribal Sovereignty

Historical Perspective

American Indian tribes, including many bands of the Kumeyaay Nation, existed as sovereign governments long before Europeans came to North America. Before the American Revolution, treaties were signed by American Indian nations with European governments. Following their independence, the United States government guaranteed continued federal recognition and treatment of tribes as sovereign governments in exchange for land. This guarantee included protected jurisdiction within the boundaries of reservations and other lands held in trust for tribes by the U.S. government.

Historically, state governments—including California—have been hostile to the concept of recognizing tribes as governmental entities of equal stature. Under the Constitution of the United States, as well as numerous treaties and court decisions, the federal government undertook to protect tribes from the states, which have often coveted American Indian lands and assets and sought to impose their will on Indian tribes and people.

Tribal Governments Long Recognized As Sovereign

The U.S. Supreme Court repeatedly recognized tribal sovereignty in court decisions dating back more than 170 years.

In 1831, the Supreme Court, in Cherokee Nation v. Georgia, ruled that Indian nations had the full constitutional right to manage their own affairs, govern themselves internally, and engage in legal and political relationships with the federal government and its subdivisions.

In California v. Cabazon (1987), the Supreme Court affirmed the right of tribes, as sovereign nations, to conduct gaming on Indian lands, free of state control, when similar gaming outside the reservation is permitted by the state for any purpose.

This sovereignty was further recognized, while at the same time infringed upon, by the Indian Gaming Regulatory Act, passed by Congress in 1988. The act reaffirms the right of tribes to conduct gaming on Indian lands, but gives the states the ability to negotiate joint authority over gaming regulation and the scope of games permitted through the execution of tribal-state compacts for Class III (casino) games.

In 1998, President Bill Clinton issued an executive order that supports the unique legal relationship that exists between the U.S. government and Native American tribal governments. The order states in part, “In formulating policies significantly or uniquely affecting Indian tribal governments, agencies shall be guided, to the extent permitted by law, by principles of respect for Indian tribal self-government and sovereignty, for tribal treaty and others rights, and for responsibilities that arise from the unique legal relationship between the Federal Government and Indian tribal governments.”

As a result of their governmental status, tribes are not subject to taxation by state or federal governments.

Recognized Indian Tribes

Not any group of Indians can be recognized as a “sovereign Indian nation.” There are strict federal standards and a lengthy process to establish that an Indian community was and is a historic Indian nation, recognized as sovereign by the Government of the United States.

Today, tribes do not have any formal, constitutionally protected, government-to-government relationship with the United States unless recognized by the federal government. Most Indian nations were recognized in the 18th and 19th centuries. A few tribes, decimated by war, were overlooked by the U.S., as they clung tenaciously to remote corners of their aboriginal homelands. Recognition can happen in only two ways: The tribe is recognized by an act of Congress, or a tribe undertakes the lengthy and complex federal recognition process with the U. S. Department of the Interior. As a result of acts of Congress, the Viejas Band of Kumeyaay Indians is recognized as a sovereign government having a government-to-government relationship with the U.S. government. Accordingly, the Viejas Band is afforded U.S. Constitutional protections.

Each Tribe Determines Its Membership

By right, a sovereign nation defines who its citizen-members are. In the United States, American Indian tribes, as sovereign nations, set their own rules for membership. In a sense, many American Indians possess something akin to dual citizenship: They are citizens of the United States, a sovereign nation, and also members of their respective tribes, also sovereign nations. Usually, a degree of American Indian blood is necessary for membership in a specific tribe. For the Viejas Band, lineage also must be demonstrated from one of the people of the Capitan Grande Reservation, who contributed their share from the sale of their lands for the El Capitan Reservoir to purchase the current reservation in Viejas Valley.

Tribal Government and Paying Taxes

Do Indian people pay taxes?

Individual American Indians and Alaska Natives and their individually owned businesses pay federal income tax just like every other American. The one exception is when an Indian person receives income directly from a treaty or trust resource such as fish or timber, then that income is not federally taxed. States also cannot tax tribal members who live on and derive their income from tribal lands.

How does Viejas pay and generate taxes?

  • Members of the Viejas Band of Kumeyaay Indians pay income tax each year on their income.
  • The 1,747 people that the Viejas Band employs also pay federal and state taxes on $59.1 million in wages.
  • In addition to these taxes, the Viejas Band spends more than $70 million annually on more than 4,000 vendors for goods and services, creating millions more in tax revenue from local businesses.

Do state and local governments pay taxes?

No, although federal, state, and local governments all operate revenue-producing enterprises to provide supplemental revenues from the myriad taxes and fees each imposes upon their citizens. Among government revenue-producing enterprises are parks, zoos and other tourist attractions, water and power systems, toll roads and bridges, airports and maritime ports, plus a host of other activities, which would be considered businesses if placed in the private sector. State governments also supplement their budgets with gambling revenues.

Do tribal governments pay federal taxes?

Tribal government revenues are not taxed, just like state and local government revenues are not taxed. The federal government has never taxed governmental revenue of state, tribal or local governments. This is a long-standing federal policy with Constitutional support that prevents interference with the ability to raise revenue for government functions. Like state and local governments, tribal governments use their revenues to provide essential services for their citizens. Unlike state governments, tribal governments are not in a position to levy property or income taxes. Income from tribal businesses is the only non-federal revenue source.

Do tribal governments pay state taxes?

States cannot directly tax a tribal government. The U.S. Supreme Court has held that state governments can collect excise taxes on sales to non-members that occur on tribal lands, as long as the tax does not fall directly on the tribal government. States and tribes have developed a variety of methods for collecting these taxes, which most often take the form of intergovernmental agreements or pre-taxing at the wholesale level. The Viejas Band of Kumeyaay Indians, for example, voluntarily requires Viejas Outlet Center businesses to collect California Sales and Use Taxes, which amount to millions of dollars to support state and local governments.