[Congressional Record Volume 146, Number 35 (Monday, March 27, 2000)]
[Extensions of Remarks]
[Page E417]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

[[Page E417]]



                 IMPROPER TAXATION OF NATIVE AMERICANS

                                 ______
                                 

                           HON. GEORGE MILLER

                             of california

                    in the house of representatives

                         Monday, March 27, 2000

  Mr. GEORGE MILLER of California. Mr. Speaker, I rise to highlight an 
ongoing injustice: state taxation of the income of Native American 
servicemen and women.
  The law is clear that a state may not tax the income of tribal 
members who live on and derive their income from activity within the 
reservation. Similarly, a state may not tax the income of tribal 
members who serve in the military and claim their reservation as their 
home. Nevertheless, these tribal members continue to be taxed by 
several states. This practice has likely deprived thousands of Native 
Americans of millions of dollars.
  By withholding federal wages of these Native American service 
personnel for state income taxes, the Department of Defense may 
unwittingly be assisting this improper taxation. To date, the burden 
has fallen on individual servicemen and women to press their claims and 
seek recovery of their federal wages from the states. To redress this 
wrong on a systemic basis. Mr. Young of Alaska, Chairman of the 
Committee on Resources, Mr. Skelton, Ranking Democratic Member of the 
Committee on Armed Services, and I have asked the Secretary of Defense 
to ensure that federal withholding procedures do not abet or perpetuate 
this practice.
  I submit for the Record the letter to the Secretary of Defense:

                                         House of Representatives,


                                       Committee on Resources,

                                    Washington, DC, March 7, 2000.
     Hon. William S. Cohen,
     Department of Defense, Office of the Secretary, The Pentagon, 
         Washington, DC.
       Dear Secretary Cohen: We are writing on behalf of Native 
     American servicemen and women who, with the Department of 
     Defense's (DOD's) aid, are subject to improper taxation by 
     the states. As you know, Native Americans have a strong 
     tradition of military service and have served their country 
     in proportions greater than that of the general population. 
     Nearly 16% of the Indian population 16 years and older--over 
     150,000 people--are veterans.
       It is well-established that a state may not tax the income 
     of tribal members who live on and derive their income from 
     activity within the reservation. See, e.g., Oklahoma Tax 
     Commission v. Chickasaw, 515 U.S. 450 (1995); McClanahan v. 
     Arizona Tax Commission, 411 U.S. 164 (1973). The Soldiers' 
     and Sailors' Civil Relief Act, 50 U.S.C. App. Sec. 574, 
     provides that service members do not lose their domicile for 
     taxation purposes when on military assignment. Accordingly, 
     tribal members who claim their reservation as their home when 
     serving in the military are not subject to state income 
     taxation. See Fatt v. Utah State Tax Commissioner, 884 P.2d 
     1233 (Utah 1994); Turner v. Wisconsin Department of Revenue, 
     Tax Appeals Commission, No. I-9755 (June 19, 1986); Beck v. 
     North Carolina Department of Revenue, Opinion of the Tax 
     Commissioner, No. 99-386 (January 25, 2000).
       Although the law is clear, tribal members domiciled on the 
     reservation who are serving their country continue to be 
     taxed by several states. DOD is instrumental in facilitating 
     this improper taxation by withholding federal wages for state 
     income taxes pursuant to 5 U.S.C. Sec. 5517. That statute 
     authorizes federal agencies to enter into agreements with 
     states to withhold state income tax from the wages of federal 
     employees.
       We are writing to request that DOD review and revise the 
     records of Native American service personnel to ensure that 
     this practice of withholding federal wages for state income 
     tax cease for those claiming the reservation as their home. 
     Over the years, this practice has likely deprived thousands 
     of Native American servicemen and women of millions of 
     dollars. We note that while immediate action on your part 
     will stop this unjust practice and inform states and tribal 
     members of the law, it will not provide retroactive relief 
     for tribal members.
       Please let us know of the steps you plan to take to redress 
     this wrong and your progress towards that goal. Thank you for 
     your attention to this important matter.
           Sincerely,
     George Miller,
       Senior Democratic Member,
     Ike Skelton,
       Senior Democratic Member,
       Committee on Armed Services.
     Don Young,
       Chairman.

       

                          ____________________