McClanahan v. Ariz. State Tax Comm'n - 411 U.S. 164, 93 S. Ct. 1257 (1973)

Rule:

State laws generally are not applicable to tribal Indians on an Indian reservation except where congress expressly provides that state laws shall apply. It follows that Indians and Indian property on an Indian reservation are not subject to state taxation except by virtue of express authority conferred upon the state by act of congress.

Facts:

McClanahan, enrolled member of the Navajo tribe, who lived on the Navajo reservation in Arizona and derived all her 1967 income from within the Navajo reservation, sued in the Superior Court of Apache County, Arizona, on behalf of herself and those similarly situated, for a refund of withheld Arizona income taxes and a declaration that the state income tax was unlawful as applied to reservation Indians. The complaint was dismissed and the Court of Appeals of Arizona affirmed.

Issue:

Was the tax, as applied to reservation Indians with income derived wholly from reservation sources, unlawful?

Answer:

Yes.

Conclusion:

The court reversed, holding that by imposing the tax in question on McClanahan, Arizona State Tax Commission interfered with matters which the relevant treaty and statutes left to the exclusive province of the federal government and the Indians themselves. The court found that the tax was, therefore, unlawful as applied to reservation Indians with income derived wholly from reservation sources. The court held that in this case, McClanahan’s rights as a reservation Indian were violated when the state collected a tax from her which it had no jurisdiction to impose.