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Smith: Current Tax Policy Hamstrings Tribes’ Chances for a Brighter Economic Future
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July 22nd, 2008 - Washington, DC - As a long-time advocate for tax incentives to assist in faster economic development in Indian Country, Senator Gordon H. Smith offered the following statement today after a hearing in the Senate Finance Committee reviewing the tax code as it applies to Indian governments:
“Since the late 1960’s, the federal government has supported a policy of self-determination for Indian tribes. This policy, in theory, has meant that the Congress and the federal government have attempted to foster the development of tribal economies and support tribal self-government. Unfortunately, our government has not done its job. In fact, our current tax policy does the opposite of promoting economic development in Indian Country; it actually hamstrings our tribes’ chances for a brighter and more robust economic future. Without access to capital, tribal economies are effectively at a stalemate.
“Tribes need a solid economy and tax base to preserve their way of life. To help them to achieve this goal, Congress needs to rethink its current tax policy to better foster the development and diversification of tribal economies. I am committed to working with Chairman Max Baucus to enact our tax bill to expand tax-exempt bonding authority for Indian tribes, placing them on a level-playing field with their state and local counterparts. I also look forward to working with my colleagues on extending other tax incentives, such as renewable energy credits, to Indian Country. If Oregon tribes can help contribute to a future of renewable energy, we certainly should be doing all we can to help them invest in promising green technology.
“I am hopeful that Congress and the tribes can work together to achieve tax policy that supports the development of long-term, self-sustaining economic growth. Simple and fair adjustments to the tax code can lead to the type of economic development our tribes need to diversify their economies and maintain their culture, reservations and sovereignty.”
In both the 109th and 110th Congresses, Senators Smith and Baucus introduced the Tribal Government Tax-Exempt Bond Parity Act to expand the tax-exempt bonding authority for Indian tribes. Under current policy, interest on debt obligations issued by a State or local government is excluded from income. In contrast, Indian tribes can only issue tax-exempt bonds to finance activities that are “essential government” functions. This bill will provide tribal governments with the same tax-exempt bonding authority as their state and local counterparts for the purpose of economic development and diversification in Indian Country.
In 2006, Senator Smith chaired a similar hearing titled, “Encouraging Economic Self-Determination in Indian Country,” in the subcommittee on Long-Term Growth and Debt Reduction. Along with his seat on the Senate Finance Committee, Senator Smith also serves on the Indian Affairs Committee.
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