In nearly every jurisdiction throughout the United States, local governments derive a significant portion of their operating revenue from property taxes. The money land owners pay in property taxes goes to fund basic infrastructure such as roads and schools and services such as police and fire protection.
There is however one jurisdiction within which the local government cannot collect property taxes: Tribal lands held in federal trust.
Tribal governments cannot impose property taxes on reservation land that has been taken into trust by the federal government, which is typically most if not all of the land owned by Tribal members within the bounds of a reservation. Tribes are thus deprived of the benefit of countless millions of dollars in revenue that would normally be available to any other municipality. With poverty and sub-standard facilities still endemic on reservations throughout America, there is a sad irony in the fact that the place where property taxes could do the most good are the only places they cannot be collected and put back into the community.
The denial of taxing authority to Tribes also has another negative impact on Native Communities, this time in the context of the national consciousness. In order to make up for unavailable property tax revenue, many Tribes utilize alternative income sources such as casino gaming and discounted tobacco products to finance basic services within their reservations. Since in most states these offerings are only available within the sovereign territory of a Tribe, many Americans hold an ill-informed view that Native Americans enjoy “special privileges”, and that other benefits and services to Tribes should therefore be curtailed. The lack of understanding of why these alternative revenue sources are necessary could perhaps be overcome by touring the decrepit infrastructure with which many Tribal Communities continue to be saddled, but such ventures by non-Natives are far from routine.
There’s no insurmountable obstacle to allowing Tribes to tax land within their jurisdictions. The federal government could enter into taxing agreements with Tribes that would allow for collection of some form of property tax, which Tribes could help structure so as to increase revenue without placing an undue financial burden on Tribal members. Numerous models for such agreements already exist, in the form of retail sales tax compacts between state and Tribal governments for business activities occurring on reservations.