U.S. Supreme Court won't hear Oklahoma tribal citizen taxation case

Bloomberg News

The U.S. Supreme Court on Monday declined to take up a case involving the taxation of tribal citizens in Oklahoma that carried the potential of a big income tax revenue loss for the state.

A petition, filed in late September by Alicia Stroble, a citizen of the federally recognized Muscogee (Creek) Nation who lived and worked on the reservation, hinged on the high court's 2020 ruling in McGirt vs Oklahoma, which affirmed about 42% of Oklahoma as tribal reservation land for criminal law purposes. 

Stroble claimed that absent congressional approval, states cannot tax the income of Native Americans who live and work within their reservations. She turned to SCOTUS after the Oklahoma Supreme Court, which ruled last year she does not qualify for a state income tax exemption, said it was not empowered to apply McGirt to taxation.

The Oklahoma Tax Commission has said thousands of taxpayers claimed exemptions from the state's income tax in the wake of McGirt and that tax exemption for tribal members would result in "tens of millions of dollars in tax refunds and deprive the state of billions more in future taxes."

Gov. Kevin Stitt said the SCOTUS decision confirms the McGirt ruling does not extend to Oklahoma's civil or taxing jurisdiction. 

"Time and time again, the courts have limited the McGirt decision, rightfully upholding state jurisdiction," he said in a statement "This decision made it clear that someone's tax bill will not be based on their race."

The matter is far from resolved and all available options are being reviewed, according to David Hill principal chief of the Muscogee (Creek) Nation, which filed an amicus brief with SCOTUS.

"Federal law governing state taxation of Indians is clear and has been reaffirmed repeatedly over time," Hill said in a statement. "When a state court ignores that law, it undermines legal certainty and invites confusion and conflict. That is not acceptable for tribal citizens, and it is not acceptable for the state of Oklahoma."

He also said the governor's attempts "to characterize these long-established legal protections as a 'racial preference' are simply false" and that SCOTUS has made it "abundantly clear" tribal citizenship is a political classification, not a racial one. 

"Tribal nations are diverse, with citizens of many races and backgrounds," Hill said. "What unites our citizens is citizenship in a sovereign tribal nation, not race."