Government shutdown exposes weakness of tribal economies

Tribal our nations have been subject to predatory colonialism that has left behind a legal infrastructure that suppresses economic growth. But there are additional factors that make it worse, say Lummi Nation Chairman Jay Julius and forrmer Seneca Nation President Robert Odawi Porter.(Photo: Andy Feliciotti)

The Indian Country economic problem is complex and deep-rooted in history, law, and policy

Jay Julius and Robert Odawi Porter

The recent federal government shutdown highlights the economic weakness of too many American Indian tribal nations. While Indian gaming is a $32 billion industry that has allowed for some economic rejuvenation, its beneficial impact has been limited for too many of the 573 federally-recognized tribes. When the federal government shut down for five weeks, Native lives were severely impacted. Why does this continue to happen? And what can be done to stop it from happening again?

The Indian Country economic problem is complex and deep-rooted in history, law, and policy. Foremost, our nations have been subject to predatory colonialism that has left behind a legal infrastructure that suppresses economic growth. But there are additional factors that make it worse.

Most tribal territories are in rural areas with few customers where gaming cannot succeed. The problem is compounded by a lack of resources that coast-dwellers take for granted – like energy, roads and broadband. In northwest Washington State, where the Lummi Nation is located, we are fortunate. But in places like southwest Alaska, where Yupik Natives live in an area as big as Washington State, there are no paved roads connecting their 56 villages, making economic growth nearly impossible.

Much economic activity that supports Indian Country is based on federal transfer payments that are mandated by treaty and contract should not be stopped for any reason. But we need to have self-sustaining economies like we once had. How can tribal nations once again regain the wealth that we need for our people through our own efforts?

First, get your Tax Man out of our pockets. The illusion that Americans “conquered” us does not justify perpetual confiscation of our wealth. Our nations ceded vast lands by treaty that are agreements that constitute pre-payment of any “tax” bill forever. The United States should help us preserve all wealth generated in our nations. Federal law recognizes that Indian farmers and fisherman are not required to pay income tax on income earned from the land and water. But try to start a business on tribal lands or work for tribal government – federal law requires that income earned on the land be subject to tax. This is absurd federal policy that kills incentive to work and drains away scarce economic resources.

Second, tribal governments should be able to receive tax dollars that are currently destined for the federal treasury. Residents of U.S. territories like Guam and Puerto Rico do not pay federal income tax because they pay taxes to support their own governments. Tribal governments should receive the same benefit by allowing their tribal citizens to have a 100% credit against any federal tax obligation for contributions they make to their own tribal governments.

Third, there must be established clear federal rules regulating economic activity on tribal lands. The Indian Trader Statutes are 19 century laws that regulate non-Indians but are no longer enforced by the federal government. But when the United States stopped protecting tribal economies, the U.S. Supreme Court allowed outside governments to assess race-based taxes on the non-Indians who do business in our lands. This not only drains away tribal wealth, it creates economic uncertainty that impedes investment.

Fourth, tribal land use must be streamlined by reducing federal land management in favor of tribal control. This is happening now through innovations such as the HEARTH Act of 2012. But tribal nations should have the option of ending federal paternalism over tribal land use by regaining title to our lands in restricted fee status, as the American Indian Land Empowerment Act would allow.

Lastly, tribal governments should have access to development capital through an Indian Country Investment Bank. If the United States can contribute billions to the World Bank to help foreign sovereign nations re-develop, it should be able to do the same to help domestic sovereign Indian nations recover from 500 years of economic devastation.

When tribal economies are strong, both Indians and non-Indians benefit. Gaming has proven this fact. When Indians have more money in our pockets, we can better care for our families. When Indian nations have more money to govern, we can provide needed services to help our people without federal dependence. When tribal economies grow, we employ non-Indians to help us, who can then care for their families and pay taxes to their state and local governments. All of this can happen when tribal lands become an oasis of economic activity rather than a black hole.

Since the beginning of our relationship, Indian Country and Alaska Natives have fought an economic “zero sum” game with the Americans. What we have had, the Americans have wanted. Things are slowly changing. In North Dakota, for example, an innovative new tax agreement will allow tribal governments to preserve more tribal wealth for mutual tribal and state benefit. Rather than perpetuate a failed federal Indian economic policy rooted in confiscation, why can’t the federal government promote mutual respect by letting Native hands keep the money we earn just once before we spend it in the outside economy?

Jay Julius is the Chairman of the Lummi Nation and Robert Odawi Porter, Esq. is a former President of the Seneca Nation and Managing Principal of the Capitol Hill Policy Group in Washington, D.C. 

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