Cherokee Nation Oklahoma

Cherokee Nation Principal Chief Chuck Hoskin Jr.

(The Center Square) – A U.S. Supreme Court decision, McGirt v Oklahoma, ruled Muscogee Nation's reservation was never disestablished, prohibiting state prosecutors from pursuing charges in major crimes involving American Indians on reservation land. Now tribes are arguing that the ruling also extends to areas such as taxation and regulation.

At a recent panel on state tax and budget issues hosted by the Oklahoma Policy Institute, Cherokee Nation Principal Chief Chuck Hoskin, Jr. noted that the ruling exempts a number of Native American citizens from paying state income tax.

Jonathan Small, president of Oklahoma Council of Public Affairs (OCPA), told The Center Square that the decision directly impacts all Oklahomans living in the areas covered by the McGirt reservations, which now comprises most of eastern Oklahoma.

"The combined area of the McGirt reservations is home to roughly two million people, of which 21% are estimated to be American Indian," Small said. "Potentially, all Native citizens could be exempt from state income tax and state sales tax."

The Oklahoma Tax Commission previously estimated that the McGirt decision could slash Oklahoma state tax collections by $72.7 million per year from reduced income tax collections and $132.2 million annually from reduced sales/use tax collections. Small said that figure is based on only five tribes receiving McGirt status; the number of McGirt reservations is already higher than that, and could continue to increase.

"As a matter of good policy, Oklahoma should eliminate the state income tax to increase economic growth, but the case will be stronger if a sizable share of the population is already exempt from paying the tax," Small said.

The McGirt decision plays into more than just state taxes, though.

"As a result of McGirt, Oklahoma state-and-local police cannot arrest many individuals committing crimes on reservation land that are perpetrated by or against an American Indian, while tribal authorities cannot arrest or prosecute many crimes involving non-Indians as either victims or perpetrators," Small said. "Most such cases now fall under federal jurisdiction, and state officials report that federal law-enforcement officials are declining to prosecute most cases aside from the most serious crimes such as rape and murder. As a result, many crimes are going unprosecuted or remain in limbo."