McClanahan v. Arizona State Tax Commission
Headline: Blocks Arizona from taxing income of Navajo reservation members earned on the reservation, reversing state courts and protecting tribal self-government and federal treaty protections.
Holding: The State exceeded its authority by imposing its personal income tax on a Navajo reservation member whose income was earned entirely on the reservation, making the tax unlawful as applied and reversing the lower courts.
- Prevents Arizona from taxing income earned entirely on the reservation by Navajo members.
- Protects tribal self-government against state income taxation without federal or tribal consent.
- Requires federal or tribal authorization before states tax reservation residents’ reservation income.
Summary
Background
An enrolled Navajo woman living on the Navajo Reservation in Arizona had $16.20 withheld from her 1967 wages under Arizona’s personal income tax. She sued for a refund, arguing all her income was earned on the reservation and thus not subject to state taxation. Arizona trial and appellate courts rejected her claim, and the case reached this Court for review.
Reasoning
The Court asked whether Arizona could lawfully tax a reservation Indian for income earned entirely on the reservation. Looking to the 1868 Navajo treaty, the Arizona Enabling Act, federal statutes like the Buck Act, and long-standing decisions protecting tribal self-government, the Court concluded the State lacked authority to impose that tax. The Court emphasized that treaties and federal law leave internal reservation matters to the Federal Government and the tribe unless Congress authorizes state action or the tribe consents to assumption of jurisdiction; Arizona had done neither.
Real world impact
The Court reversed and held the Arizona tax unlawful as applied to reservation Indians whose income is derived wholly from reservation sources. That means Arizona cannot collect this kind of state income tax from such reservation residents unless Congress expressly authorizes it or the tribe and State follow statutory procedures to assume jurisdiction. The ruling protects tribal self-government and treaty protections for reservation residents.
Ask about this case
Ask questions about the entire case, including all opinions (majority, concurrences, dissents).
What was the Court's main decision and reasoning?
How did the dissenting opinions differ from the majority?
What are the practical implications of this ruling?