Kahn Et Ux. v. Arizona State Tax Commission

Background

A non‑Indian lawyer and his wife sued Arizona after the lawyer paid personal income tax assessments for 1967–1969 on salary he earned working first as a law clerk and later as an attorney for the Navajo Tribe. His pay came from tribal funds. After exhausting administrative remedies, they sued in Arizona state court seeking refund; the Superior Court dismissed their complaint and the Arizona Supreme Court affirmed that dismissal.

Reasoning

The Supreme Court dismissed the appeal for want of a substantial federal question and did not reach the merits. The written material before the Court shows the lawyer’s employment was governed by federal law (25 U.S.C. §81) and Interior Department regulations (25 C.F.R. §§72.1–72.25), which require federal approval of tribal attorney contracts and limit use of tribal funds. The dissent argued these federal controls and earlier decisions (cited McClanahan and Warren Trading Post) meant the case raised a substantial federal issue about whether state income tax could be applied to federally regulated tribal employment.

Real world impact

Because the Court dismissed the appeal, the state tax assessments remain in place for these years and the high Court did not create a binding national rule about taxing wages paid from tribal funds. The dispute therefore stays resolved at the state‑court level unless raised again, and affected individuals lack a Supreme Court decision on the broader tax question.

Dissents or concurrances

Justice Douglas (joined by Justice Brennan) dissented, saying the case presented a federal question tied to Congress’s regulatory scheme and should have received full argument and briefing.