Gregoire

Opinion by Judge MILAN D. SMITH, JR.; Concurrence by Judge GUILFORD.

OPINION

States lack authority to tax Indian tribes or registered members of Indian tribal organizations absent a clear authorization from Congress. Cnty. of Yakima v. Confederated Tribes & Bands of the Yakima Indian Nation, 502 U.S. 251, 258 , 112 S.Ct. 683 , 116 L.Ed.2d 687 (1992). The Tribes of the Yakama Nation (the Yakama or Tribes) claim that this principle of Indian tax immunity has been violated by the State of Washington’s current cigarette excise tax, which the Tribes argue leaves their retailers liable for payment of the tax when retailers sell cigarettes to non-Indians.

In 1978, a three-judge district court held that the legal incidence of the Washington cigarette tax did not fall on the Tribes. Confederated Tribes of Colville Indian Reservation v. Washington, 446 F.Supp. 1339 (E.D.Wash.1978). In 1980, the Supreme Court agreed with the three-judge court and upheld the validity of Washington’s cigarette tax and its requirement that tribal retailers collect the tax from non-Indian cigarette purchasers. Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134, 159-61 , 100…

concurring in the judgment:

I concur in the result.

This case requires us to determine if a tax imposed on certain economic activity of the Tribes of the Yakama Nation creates a “legal incidence” upon the Tribes. The impact of various forms of taxation on a people has been apparent throughout our country’s history, going back at least to when American patriots — ironically dressed as Indians — threw tea into Boston Harbor. The burden of taxation was the fuel in the fire of freedom ignited by our country’s founders, and that burden continues to be a powerful factor in today’s politics.

In this case, the tax burden must be analyzed through the prism of the “legal incidence” test, which often focuses on the issue of whether the tax can be passed through or passed along to others. An economist reviewing this “pass through” issue would analyze the demand elasticity for the product being taxed. In further review of the burden of taxation, an economist, aware of the negative slope of demand curves, would conclude that increasing the price of a product through a tax necessarily will decrease sales volume. And in comparing the impact of immediate cash payments with deferred payments, an…