Tax reform is important to Indian Country because it presents an opportunity to fix some of the structural problems that cripple tribal economies and to create incentives to encourage investment on tribal lands.

There is very little in the current tax code that supports investment on tribal lands. There is a small credit for wages paid for jobs created in Indian Country, as well as for accelerated depreciation of equipment that is associated with investment on tribal lands. Neither of these provisions is permanent or reflective of policy consensus; the Senate Finance Committee has recommended their extension but Ways & Means Committee Chairman Dave Camp (R-Wis.) has proposed repeal.

In addition, there are legal oddities that discriminate against tribal governments and undermine tribal investment opportunities. For example, Indian tribal governments are not recognized as having the same authority as state and local governments to issue private activity bonds and must demonstrate that debt issuance is for an "essential government function."

Another barrier is that the federal courts have allowed state and local governments to assess taxes on on-reservation business activities on racial grounds simply because customers and business partners on tribal lands are non-Indians.