OTC Says McGirt Decision Could Cost State Millions In Tax Revenue

Monday, October 5th 2020, 6:03 pm

The Oklahoma Tax Commission said the landmark Supreme Court ruling on McGirt v. Oklahoma could cost Oklahoma millions of dollars.

In a new report, the OTC predicts how the ruling could affect the state’s bottom line. The OTC said, due to the McGirt decision, the state doesn’t have the authority to collect taxes from tribal members who do business on the Muscogee Creek reservation.

"It looks as though the state of Oklahoma is acknowledging the McGirt ruling, the definition of Indian country, could have civil impacts, they go beyond just the criminal jurisdiction issues," said Terra Branson, Secretary of the Nation and Commerce for the Muscogee (Creek) Nation. "We were really surprised and excited to see that the Oklahoma Tax Commission took the opportunity to write this report and acknowledge that there may be implications." 

Branson said the Muscogee (Creek) Nation anticipated there would be some civil implications by the McGirt Ruling, which claimed the Creek reservation was never disestablished, but the tax commission's report is the first time they’ve seen the state go on record, acknowledging that there are civil implications in the long-term.

The Oklahoma Tax Commission anticipates the primary fiscal impact of McGirt will be reflected in reduced collections for individual income tax and sales/use tax. The report states that in one fiscal year, the state collected $2.5 billion in individual income tax. The report said the McGirt ruling could reduce that income by $21 million. 

The Creek Nation argues those numbers are skewed because their tribe's demographic data was not accurately reflected. 

"I think there's still a lot of room for discussion and debate about whether this number really reflects what the state is likely to experience and really the kind of impact that it might have in the state of Oklahoma generally," Branson said. 

Oklahoma Tax Commission Executive Director Jay Doyle also proposed a solution in the report for the Muscogee (Creek) Nation to make a compact with the state, a solution Creek Nation leaders were already considering.

"It's really refreshing to see the tax commission and the Muscogee (Creek) Nation Reservation Protection Commission are on the same page and that hopefully we can come to some collaborative solutions that work for everyone," Branson said.  

The tax commission also said it can see larger impacts to tax revenue if all five civilized tribes are established as reservations. Muscogee (Creek) Nation leaders said they plan to meet with the tax commission soon to discuss how to move forward. 

You can read the full report below.