Opinion: Tax-hungry states going after tribal tobacco market

You know the world has come a long way, baby — in a circle — when politicians try to tax that toasted taste right out of your smokes and find themselves fighting Indians in the process. Around the world, officials have tried to squeeze smokers (for their own good, of course) of as much cash as possible in return for allowing them to enjoy their chosen vice. The end result has been thriving black markets, whether in Europe or the United States. Complicating this matter in the U.S., though, are those little islands of quasi-sovereignty known as Indian reservations. As cigarette taxes have soared, Native Americans have perceived entrepreneurial opportunity in peddling and even manufacturing low-cost smokes for eager customers. Not so surprisingly, state officials have responded with attacks on tribal independence.

Technically, states are authorized to tax cigarettes sold on reservations to non-Indians, but they don't have the authority to enter reservations to collect that tax. That's courtesy of Oklahoma Tax Commission v. Citizen Band of Potawatomi, decided in 1991. There's a lot of hedging and on the other hand in that situation — some states claim a measure of legal power over tribal lands under Public Law 280 or similar measures. But, basically, a legal standoff is in place.

As you might guess, this infuriates some public officials. New York City Mayor Bloomberg went so far as to urge then-Governor David Paterson to "get yourself a cowboy hat and a shotgun" to collect cigarette taxes from Indian tribes and their customers.