Bipartisan Tax and Investment Bill Aims to Level Playing Field for Tribal Economies

By Brian Edwards

Tribal Business News

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In a move hailed as a "significant step forward,” U.S. Reps. Gwen Moore (D-WI) and David Schweikert (R-AZ) introduced the bipartisan Tribal Tax and Investment Reform Act on Wednesday.

The legislation, H.R. 8318, aims to level the playing field for tribal governments by granting them greater access to tax-free bonds and economic development programs.

The bill would amend the Internal Revenue Code of 1986 to treat Indian tribal governments in the same manner as state governments for certain federal tax purposes, and for other purposes. It would repeal the "essential government function" test, a hurdle that has limited tribes' ability to issue tax-exempt bonds for vital projects like infrastructure, housing, and public parks, according to a briefing on the legislation.

"This legislation is a significant step forward for tribal tax parity, and critical to spur business development in Indian Country," Rodney Butler, chairman of the Mashantucket Pequot Tribal Nation and president of the National American Finance Officers Association (NAFOA), said in a statement. "By allowing tribes greater access to tax-exempt bonds and increasing available credit, the bill will help create jobs and economic growth."

Additionally, the legislation modifies the Low-Income Housing Tax Credit program, automatically qualifying all tribal areas as "difficult development areas." This designation makes tribal communities eligible for a 30% boost in tax credits, a significant advantage for financing affordable housing projects.

Recognizing the persistent economic challenges faced by many tribal nations, the bill also creates a dedicated $175 million annual allocation of New Market Tax Credits for Indian Country. This program incentivizes private investment in economically disadvantaged communities by offering tax breaks to investors.

"The Tribal Tax Investment and Reform Act is a comprehensive approach to addressing the inequities faced by tribal governments in accessing federal tax programs," Moore said in a statement. "By ensuring tribes have the same opportunities as state and local governments, we can empower them to create jobs, attract capital, and support their communities."

The bipartisan legislation has garnered early support from both sides of the aisle, with initial co-sponsors including Representatives Dan Kildee (D-MI), Mike Kelly (R-PA), Suzan DelBene (D-WA), Tom Cole (R-OK), Derek Kilmer (D-WA), and John Moolenaar (R-MI).

The new tribal tax legislation builds on prior legislative proposals introduced by retired Rep. Ron Kind (D-WI) in every Congress since the 113th session.  The new bill has several new provisions as well as important changes to previously introduced measures, according to a statement from NAFOA.

The bill's passage would mark a significant victory for tribal leaders who have long advocated for fairer treatment within the federal tax code. By removing unnecessary barriers and providing access to crucial economic development tools, the Tribal Tax and Investment Reform Act has the potential to unlock economic growth and improve the well-being of Native American communities across the country.