Follow up on California case re: taxing per-capita payments

In the article TWP posted a few weeks ago regarding the California Court of Appeals ruling that the state could tax the per-capita payments received by a member of Twenty-Nine Palms Band of Mission Indians living on the Agua Caliente Band of Cahuilla Indian reservation the member’s attorney stated that, “The law is if you live in Indian Country, and you're an Indian and you derive all the income from your tribe, on your tribe's land, you are supposed to be tax exempt.” What he is probably referring to is a 1973 US Supreme Court case called McClanahan v. Arizona State Tax Comm'n, 411 U.S. 164 (1973).

In that case the US Supreme Court found that the State of Arizona has no jurisdiction to impose a tax on the income of Navajo Indians residing on the Navajo Reservation and whose income is wholly derived from reservation sources, as is clear from the relevant treaty with the Navajos and federal statutes.

If you are interested in reading the case in its entirety click here.

-CMD