Indianz.Com Video: Select Revenue Measures Subcommittee - Examining the Impact of the Tax Code on Native American Tribes - March 4, 2020

Tribes head to Capitol Hill for 'historic' hearing on taxation issues

WASHINGTON, D.C -- A Congressional hearing on tax issues in Indian Country is "historic" in more ways than one, according to a key lawmaker.

The hearing on Wednesday morning marks the first time the House Committee on Ways and Means has looked at the impact of the tax code on Indian nations. That's important, Rep. Dan Kildee (D-Michigan) said, because federal policy hasn't always treated tribes as sovereigns, hindering economic opportunities in the process.

"Part of the issue is that the tax code, much of it was written in an era when tribal governments were barely recognized as legitimate governments," Kildee said in an interview on Tuesday. "The trust responsibility that we have hasn't been acknowledged by the United States to anywhere near the degree it should be until very recently."

And while tribes have been coming to Capitol Hill for decades to seek equitable treatment for their governments, the hearing represents a major turning point in the nation-to-nation relationship. It's the first time that all four tribal citizens who serve in the U.S. Congress will be appearing together on the same panel, Kildee noted.

"It's really historic," Kildee said of the presence of Rep. Sharice Davids (D-Kansas) and Rep. Deb Haaland (D-New Mexico), who are the first two Native women in Congress, along with Rep. Tom Cole (R-Oklahoma) and Rep. Markwayne Mullin (R-Oklahoma).

"It's sad that it's taken until the year 2020 for the U.S. Congress to recognize these inequities but it's never too late to do the right thing," said Kildee, who serves on the House Committee on Ways and Means and whose uncle, former Rep. Dale Kildee, was known as a champion for Indian issues in the nation's capital.

Whether it's dual taxation of tribal business activities by states and local governments or disparities in the treatment of tax-exempt bonds issued by tribes, Indian Country's economic development needs are great. But tribes and their advocates say Congress missed a huge opportunity to address these inequities during passage of tax reform legislation more than two years ago.

"Congress left Indian Country completely out of the 2017 Tax Cuts and Jobs Act," National Congress of American Indians President Fawn Sharp said in the State of Indian Nations, delivered in D.C. on February 10.

The omission was all the more notable in light of "years of Hill advocacy by NCAI and our partners in promoting Indian Country’s tax reform priorities -- priorities that will clearly boost tribal efforts to build sustainable economies and grow local job opportunities," added Sharp, who will be among the witnesses at the hearing.

Indianz.Com Video: State of Indian Nations 2020 #SOIN2020

The economic benefits are indeed immense, according to advocates like Dante Desiderio, a citizen of the Sappony Tribe who serves as the executive director of the Native American Finance Officers Association, another organization participating in the hearing. When it comes to tax-exempt bonds, for instance, tribes are missing out on the financial benefits already enjoyed by states and local governments.

"This is a trillion-dollar market and Indian Country has this crazy caveat that they can only use this debt for 'essential government functions,'" Desiderio said at NCAI's winter session in D.C. last month, bringing up an issue that has been clouded in uncertainty for decades.

"Nobody knows what that really means," Desiderio said of the test employed by the Internal Revenue Service.

Ending dual taxation in Indian Country is another big area of concern. States and local governments are able to take a cut on everything from energy development to sales of basic goods and products so addressing the inequity is a top priority.

"Nationwide, it's $40 billion of economic stimulus and it doesn't cost taxpayers a single dime," Gavin Clarkson, a citizen of the Choctaw Nation who is seeking the Republican nomination for an open U.S. Senate seat in New Mexico, said of the benefits of ending dual taxation during NCAI's meeting on February 12.

The Tax Cuts and Jobs Act became law in 2017, when Republicans were in control of both chambers in Congress. But with the bipartisan representation at Wednesday's hearing -- Democrats Davids and Haaland, plus Cole and Mullin from the GOP -- Kildee said the House Ways and Means Committee is putting Indian Country's interests on the front-burner for the first time since passage of the earlier measure.

"We need to figure out what are the specific areas that we can align in the tax code to align with our nation-to-nation relationship and to treat tribal governments like we treat other governments when it comes to taxation," Kildee said.

Going forward, all options for achieving parity for tribal nations should be on the table, Kildee said. Comprehensive legislation or specific fixes to the tax code are potential outcomes from the hearing.

"There's all these areas where tax policy was written without even thinking of the effect on tribal governments and we want to fix that," Kildee told Indianz.Com.

"My hope is that we can do as much as possible," Kildee added.

Timing is going to be an issue, tribal leaders and advocates acknowledge. The current session of Congress will conclude at the end of this year, giving Indian Country several more months to advance potential fixes before having to start over again in 2021.

"Indian Country has a unique opportunity to pass a tribal tax bill in the 116th Congress," Larry Wright Jr., the chairman of the Ponca Tribe said at NCAI's winter meeting last month. The organization has established a tax and finance task force, consisting of Wright and other tribal leaders, to take advantage of the current political climate.

And with the presidential campaign in full swing, attention will certainly draw minds away from D.C. Almost all of the Democrats who are still in the race have released Indian Country platforms that highlight infrastructure and economic needs in tribal communities.

"Reorienting government policy to promote economic development isn’t simply about removing barriers that have prevented Native Americans and indigenous people from accessing the economic opportunities they have been denied," Elizabeth Warren, the senior U.S. Senator from Massachusetts, stated in her comprehensive agenda, which she announced last August. "It also requires streamlining and removing unnecessary administrative barriers that impede economic growth on Tribal lands, respecting tribal jurisdiction over tribal businesses, and promoting forward-looking efforts to ensure full access to new and emerging economic opportunities.

“The indigenous peoples of this land deserve respect – respect for their sovereignty, respect for their right to self-governance, respect for their culture – and that’s what they’ll receive when I’m president," Mike Bloomberg, a former mayor of New York City, said in releasing his tribal platform last week.

"For decades, Joe Biden has worked to foster tribal sovereignty and prosperity, and to ensure the United States follows through on the commitments it has made to Indian Country," the former vice president's policy reads. "He knows that Tribal Nations should be empowered to govern Native communities and that the United States must work harder to meet its solemn trust and treaty obligations."

National Congress of American Indians President Fawn Sharp delivers the State of Indian Nations in Washington, D.C., on February 10, 2020. Photo by McKenzie Sadeghi / Cronkite News

The hearing before the Select Revenue Measures Subcommittee takes place at 10am Eastern in Room 1100 of the Longworth House Office Building. The witness list follows:

The Honorable Sharice Davids
Member of Congress

The Honorable Deb Haaland
Member of Congress

The Honorable Tom Cole
Member of Congress

The Honorable Markwayne Mullin
Member of Congress

Fawn Sharp
President, National Congress of American Indians

Cristina Danforth
President of the Board, Native American Financial Officer’s Association

Kenneth Kahn
Chairman, Santa Ynez Band of Chumash Indians

Rodney Butler
Chairman, Mashantucket Pequot Tribal Nation

Matthew Wesaw
Chairman, Pokagon Band of Potawatomi Indians

House Committee on Ways and Means Notice
Select Revenue Measures Subcommittee Hearing on Examining the Impact of the Tax Code on Native American Tribes (March 4, 2020)

Relevant Documents
Joint Committee on Taxation: Overview Of Federal Tax Provisions And Analysis Of Selected Issues Relating To Native American Tribes And Their Members (February 28, 2020)

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