The Mescalero Apache Tribe operates a ski resort in the State of New Mexico, on land located outside the boundaries of the Tribe's reservation. The State has asserted the right to impose a tax on the gross receipts of the ski resort and a use tax on certain personalty purchased out of State and used in connection with the resort. Whether paramount federal law permits these taxes to be levied is the issue presented by this case.
The home of the Mescalero Apache Tribe is on reservation lands in Lincoln and Otero Counties in New Mexico. The Sierra Blanca Ski Enterprises, owned and operated by the Tribe, is adjacent to the reservation and was developed under the auspices of the Indian Reorganization Act of 1934, 48 Stat. 984, as amended, 25 U. S. C. § 461 et seq.
The Tribe has paid under protest $26,086.47 in taxes to the State, pursuant to the sales tax law, N. M. Stat.
At the outset, we reject—as did the state court—the broad assertion that the Federal Government has exclusive jurisdiction over the Tribe for all purposes and that the State is therefore prohibited from enforcing its revenue laws against any tribal enterprise "[w]hether
But tribal activities conducted outside the reservation present different considerations. "State authority over Indians is yet more extensive over activities . . . not on any reservation." Organized Village of Kake, supra, at 75. Absent express federal law to the contrary, Indians going beyond reservation boundaries have generally
The Enabling Act for New Mexico, 36 Stat. 557,
We also reject the broad claim that the Indian Re-organization Act of 1934 rendered the Tribe's off-reservation ski resort a federal instrumentality constitutionally immune from state taxes of all sorts. M'Culloch v. Maryland, 4 Wheat. 316 (1819). The intergovernmental-immunity doctrine was once much in vogue in a variety of contexts and, with respect to Indian affairs, was consistently held to bar a state tax on the lessees of, or the product or income from, restricted lands of tribes or individual Indians. The theory was that a federal instrumentality was involved and that the tax would interfere with the Government's realizing the maximum return for its wards. This approach did not survive; its rise and decline in Indian affairs is described and reflected in Helvering v. Mountain Producers Corp., 303 U.S. 376 (1938); Oklahoma Tax Comm'n v. United States, 319 U.S. 598 (1943); and Oklahoma Tax Comm'n v. Texas Co., 336 U.S. 342 (1949), where the Court cut to the bone the proposition that restricted Indian lands and the proceeds from them were—as a matter of constitutional law—automatically exempt from state taxation. Rather, the Court held that Congress has the power "to immunize these lessees from the taxes we think the Constitution permits Oklahoma to impose in the absence of such action" and that "[t]he question whether immunity shall be extended in situations like these is essentially legislative in character." Oklahoma Tax Comm'n v. Texas Co., supra, at 365-366.
Representative Howard explained that:
The Reorganization Act did not strip Indian tribes and their reservation lands of their historic immunity from state and local control.
We accordingly decline the invitation to resurrect the expansive version of the intergovernmental-immunity doctrine that has been so consistently rejected in modern times.
The Tribe's broad claims of tax immunity must therefore be rejected. But there remains to be considered the scope of the immunity specifically afforded by § 5 of the Indian Reorganization Act. 25 U. S. C. § 465.
Section 465 provides, in part, that "any lands or rights acquired" pursuant to any provision of the Act "shall be taken in the name of the United States in trust for the Indian tribe or individual Indian for which the land is acquired, and such lands or rights shall be exempt from State and local taxation."
"This Court has repeatedly said that tax exemptions are not granted by implication. . . . It has applied that rule to taxing acts affecting Indians as to all others. . . . If Congress intends to prevent the State of Oklahoma from levying a general non-discriminatory estate tax applying alike to all its citizens, it should say so in plain words. Such a conclusion cannot rest on dubious inferences." Oklahoma Tax Comm'n v. United States, 319 U. S., at 606-607. See Squire v. Capoeman, supra, at 6. Absent a "definitely expressed" exemption, an Indian's royalty income from Indian oil lands is subject to the federal income tax although the source of the income may be exempt from tax. Choteau v. Burnet, 283 U.S. 691, 696-697 (1931).
On the face of § 465, therefore, there is no reason to hold that it forbids income as well as property taxes. Nor does the legislative history support any other conclusion. As we have noted, several explicit provisions encompassing a broad tax immunity for chartered Indian communities were dropped from the bills that preceded the Wheeler-Howard bill. See n. 9, supra. Similarly, the predecessor to the exemption embodied in § 465 dealt only with lands acquired for new reservations or for additions to existing reservations. 1934 House Hearings 11. Here, the rights and land were acquired by the Tribe beyond its reservation borders for the purpose of carrying on a business enterprise as anticipated by §§ 476 and 477 of the Act.
We reach a different conclusion with respect to the compensating use tax imposed on the personalty installed in the construction of the ski lifts. According to the Stipulation of Facts, that personal property has been "permanently attached to the realty." In view of § 465, these permanent improvements on the Tribe's tax-exempt land would certainly be immune from the State's ad valorem property tax. See United States v. Rickert, 188 U.S. 432, 441-443 (1903). We think the same immunity extends to the compensating use tax on the property. The jurisdictional basis for use taxes is the use of the property in the State. See Henneford v. Silas Mason Co., 300 U.S. 577 (1937); McLeod v. J. E. Dilworth Co., 322 U.S. 327, 330 (1944). It has long been recognized that "use" is among the "bundle of privileges that make up property or ownership" of property and, in this sense at least, a tax upon "use" is a tax upon the property itself. Henneford v. Silas Mason Co., supra, at 582. This is not to say that use taxes are for all purposes to be deemed simple ad valorem property taxes. See, e. g., United States v. Detroit, 355 U.S. 466 (1958), and its companion cases; Sullivan v. United States, 395 U.S. 169 (1969). But use of permanent improvements upon land is so intimately connected with use of the land itself that an explicit provision relieving the latter of state tax burdens must be construed to encompass an exemption for the former. "Every reason that can be urged to show that the land was not subject to local taxation applies to
The judgment of the Court of Appeals is
Affirmed in part and reversed in part.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE BRENNAN and MR. JUSTICE STEWART concur, dissenting in part.
The power of Congress granted by Art. I, § 8 "[t]o regulate Commerce . . . with the Indian Tribes" is an exceedingly broad one. In the liquor cases the Court held that it reached acts even off Indian reservations in areas normally subject to the police power of the States. Perrin v. United States, 232 U.S. 478. The power gained breadth by reason of historic experiences that induced Congress to treat Indians as wards of the Nation. See Gritts v. Fisher, 224 U.S. 640, 642-643; United States v. Thomas, 151 U.S. 577, 585; United States v. McGowan, 302 U.S. 535, 538. The laws enacted by Congress varied from decade to decade. See U. S. Dept. of the Interior, Federal Indian Law 94-138 (1958), which is a revision of the monumental work, Handbook of Federal Indian Law prepared by Felix S. Cohen and published in 1940.
The present Act, 48 Stat. 984, 25 U. S. C. § 461 et seq., was enacted in 1934 with various purposes in mind, the ones most relevant being, first, "[t]o permit Indian tribes to equip themselves with the devices of modern business organization, through forming themselves into business corporations," and second, "[t]o establish a system of financial credit for Indians." S. Rep. No. 1080, 73d Cong., 2d Sess., 1.
Loans had been made by the federal agency to individual Indians, but the experience had not been satisfactory. Id., at 3-4. The 1934 Act precluded such loans and set up a $10 million revolving-credit fund for loans
The Court makes much of the fact that the ski enterprise is not on the reservation. But that seems irrelevant to me by reason of § 5 of the Act, which provides in part that "any lands or rights acquired" pursuant to the 1934 Act "shall be taken in the name of the United States in trust for the Indian tribe . . . for which the land is acquired, and such lands or rights shall be exempt from State and local taxation." 25 U. S. C. § 465. While the lease of Forest Service lands was not technically "acquired . . . in trust for the Indian tribe," the Court concedes that the lease arrangement was sufficient to bring the Tribe's interest in the land within the immunity afforded by § 465. And so the question respecting income taxes comes down to whether these taxes are within the scope of "such lands or rights" as used in § 5.
I start from the premise made explicit in the Senate Report on the 1934 Act. It set forth the endorsement by President Roosevelt of "a new standard of dealing between the Federal Government and its Indian wards." S. Rep., supra, at 3. Article 10 of the 1852 Treaty with the Apaches described the role of the guardian as respects these wards: "For and in consideration of the faithful performance of all the stipulations herein contained, by the said Apache's Indians, the government of the United States will grant to said Indians such donations, presents, and implements, and adopt such other liberal and humane measures as said government may deem meet and proper." 10 Stat. 980.
The 1934 Act obviously is an effort by Congress to extend its control to Indian economic activities outside the reservation for the benefit of its Indian wards. The philosophy permeating the present Act was articulated
As noted in Warren Trading Post v. Tax Comm'n, 380 U.S. 685, most tax immunities of Indians have related to activities in reservations. But, as we stated in that case, the fact that the activities occurred on a reservation was not the controlling reason, "but rather because Congress in the exercise of its power granted in Art. I, § 8, has undertaken to regulate reservation trading in such a comprehensive way that there is no room for the States to legislate on the subject." Id., at 691 n. 18.
The powers of Congress "over Indian affairs are as wide as State powers over non-Indians," subject, of course, to the limitations of the Bill of Rights. Federal Indian Law 24. One illustration of its extent is shown by the liquor cases already cited. We deal here, however, with "tribal property"—a leasehold interest in federal lands adjoining the reservation. "The term tribal property. . . does not designate a single and definite legal institution, but rather a broad range within which important variations exist." Federal Indian Law 590-591. There is no magic in the word "reservation." United States v. McGowan, supra, held that land purchased by Congress for a tribe but outside a "reservation" was nonetheless "Indian country." While that case involved application of liquor laws, the Court stated that "Congress alone has the right to determine the manner in which this country's guardianship over the Indians shall be
In the present case, Congress has attempted to give this tribe an economic base which offers job opportunities, a higher standard of living, community stability, preservation of Indian culture, and the orientation of the tribe to commercial maturity. We deal only with a tribal-developed enterprise. State taxation of that enterprise interferes with the federal project. The ski resort, being a federal tool to aid the tribe, may not be taxed by the State without the consent of Congress. Congress by § 5 of the Act has made the "lands or rights" acquired for the tribe exempt from state and local taxation. Section 5, indeed, states that "lands or rights" acquired under the 1934 Act shall be held "in trust for the Indian tribe or individual Indian for which the land is acquired." There is no more convincing way to tax "rights" in land than to impose an income tax on the gross or net income from those rights. If § 5 be thought to be ambiguous, we should resolve the ambiguity in favor of the tribe. As stated in Carpenter v. Shaw, 280 U.S. 363, 367, "Doubtful expressions are to be resolved in favor of the weak and defenseless people who are the wards of the nation, dependent upon its protection and good faith." In Squire v. Capoeman, 351 U.S. 1, we resolved doubts respecting the federal income tax in favor of the Indian. There is the same reason for taking that course here.
The tribal ski enterprise, unlike the private entrepreneur in Helvering v. Mountain Producers Corp., 303 U.S. 376, on which the Court relies, is plainly a federal instrumentality—authorized and financed by Congress with the aim of starting the tribe on commercial ventures. This case has no relation to Oklahoma Tax Comm'n v. United States, 319 U.S. 598, which raised the question whether state inheritance taxes could be levied on restricted
In my view, this state income tax is barred by § 5 through which Congress has given tax immunity to these new tribal enterprises.