As all following California politics know, Governor Jerry Brown, unsuccessful at getting Republican votes to either raise taxes by a vote of the legislature or get GOP votes to place tax increases on the ballot, is now spearheading an effort to place a massive tax increase measure on ballot for this November — seeking to get voters to increase state income taxes on the wealthy, and hike the sales tax for everyone. This is a terrible idea. Newly elected Senate Republican Leader Bob Huff says it well, and succinctly, in a column today in the FlashReport: “Higher taxes are not the answer. There is a better way. New taxes will only cripple the economic recovery now underway in California.”
The Governor and his political allies will have to spend several million dollars to get this initiative qualified for the ballot, and so the main stream media is now starting to report on who is dropping in the big bucks to advance the tax increases. Of course you would expect the state’s public employee unions to be helping. But I was a little taken off guard when ace Capitol reporter Kevin Yamamura with the Sacramento Bee shared with readers that California gambling tribes had donated $275,000 to help fund Jerry Brown’s tax increase proposal — $100,000 each from the Lytton Band of Pomo Indians and the Paskenta Band of Nomlaki Indians — and $75,000 from the California Tribal Business Council which represents those two tribes as well at the Pala Band of Mission Indians.
Unfortunately I don’t think this aggressive pro-tax position by these Indian gambling tribes is really on the radar screen of most Californians. The story broke the week before Christmas, and also the Secretary of State’s CAL-ACCESS website where anyone, especially enterprising reporters, can pick up detail on political giving — was down for the count throughout the holidays.
When I read that these tribes were spending this kind of big money on placing tax increases on the ballot, my first thought was that these guys must really want to curry favor with the Governor. After all, it is the Governor with whom these Indian Tribes with gambling negotiate compacts — often times very lucrative contracts — which allow their casinos to churn out vast amounts of cash (and profit). After all, there is no doubt that politics plays heavily into the whole issue of gaming compacts, and a relatively small investment by some tribes could pay lucrative dividends down the road…
But then I thought to myself, how dumb of these Tribal leaders to want to raise their own income taxes, and to hike the sales taxes they have to charge to casino guests, or those shopping at the vast outlet malls and other retail stores built on their reservations.
All three tribes have large, luxury gambling resorts, and take in millions and millions of dollars each year. Paskenta has 700 slot machines and gaming tables in Tehema County. Lytton has 1,300 slot machines, and plenty of gaming tables, is is located in the heart of the Bay Area. Pala has 2,000 slot machines, 15 poker tables, 507 hotel rooms, and is located “in the heart of San Diego’s wine region” — and if you go soon, Tony Bennett is appearing live in concert.
But then the thought struck me — “Do Indians living on reservations even pay state income or sales taxes?”
So I looked up the answer to that question in two handy reports from the Franchise Tax Board. In the first — “Income Taxation of American Indians” — it says, “If all income you received is from Indian country sources where you are a tribal member, and you live in your tribe’s Indian Country, then California does not tax your Indian country sourced income. You are not required to file a California income tax return.”
So these Tribal Leaders, who are overseeing (and presumably being handily compensated) by these gambling casinos pay no state income tax.
The second report from the FTB is “Sales to American Indians and Sales in Indian Country” — and it tells us that, “Sales tax does not apply to sales of tangible personal property made to Indians by Indian retailers if these sales are negotiated at places of business located in Indian country, the Indian purchaser resides in Indian country, and the property is delivered to the purchaser in Indian Country.”
Furthermore, “Sales tax generally does not apply to sales of tangible personal property by Indian retailers made to non-indians and Indians who do not reside in Indian Country when these sales are negotiated at places of business located in Indian Country and the property is delivered to the purchaser in Indian Country.”
The bottom line from all of this is that transactions where Indians are selling property in Indian Country, whether to other Indians, or to non-Indians, have no state sales tax.
So it’s no wonder that Indian Tribal leaders are dropping big bucks into this measure. They curry favor with Brown, the state income tax increase does not effect them one bit (since they pay none), and an increase in the state’s sales tax actually helps them as it increases price to purchase goods from their off-reservation retail competitors.
Since these tribal leaders seem to think tax revenues are not great enough here in California, how’s this for an idea? How about if they start paying state taxes? I would like to see all of the Indians who are getting fat salaries and profit-sharing checks from the lucrative gambling businesses on their reservations, and who want to raise our taxes, have to fill out California income tax returns, and pay the same taxes as the rest of us.
There is no doubt, looking back at the history of America, that native American people were ill-treated by the government. And for that, much accommodation has been made over the years. But as far as I am concerned, if an Indian tribe has enough money and moxie to want to participate in hiking taxes on everyone in the state in which their reservation is located, then maybe it is time to phase out all of the special consideration that they get from the federal and state government, and let them live under all of the laws of our nation and state.