This week, Jon Endean (Brooklyn) reviews a new work by Alex Zhang (Emory), The Other Taxation: Tribes, Territories, and Fiscal Autonomy, 126 Colum. L. Rev. __ (forthcoming 2026).
In his article about the taxation of Native American tribes and U.S. territories, Alex Zhang makes several important contributions to the literature. Native American tribes and U.S. territories have sovereign elements that are at some levels similar to one another, but as Zhang shows, the way in which they fit within the broader U.S. tax system is very different.
Native American tribes are themselves exempt from taxation, even if the tribe is organized in a corporate structure. Under Supreme Court case law, tribes are able to tax the economic activities on Native land—but the tribes face tax competition from the states within which they are situated. This tax competition has limited the tribes’ ability to raise revenue in their own right that might be used for the benefit of the tribal members.
U.S. territories are subject to a different set of constraints. The ability of the territories to impose taxes is derived from congressional action, and bona fide residents of the various U.S. territories are typically not subject to U.S. federal income tax on their income derived from the territories. While the exact mechanics of this vary from territory to territory, the most notable—and controversial—of these is in Puerto Rico, which has lower tax rates than are imposed in the mainland, meaning that bona fide residents of Puerto Rico are able to pay lower rates than U.S. citizens anywhere else in the world. Indeed, as Zhang discusses, Puerto Rico has enacted a set of laws to draw high income individuals to emigrate to Puerto Rico with the incentive of extremely low tax rates.
Given the relative dearth of literature (particularly contemporary literature) on these topics, the article would be a useful contribution to the literature if it were just distilling the nature and history of taxation in these two types of jurisdictions. But Zhang’s article is helpful in going a step further and thinking about taxation by the tribes and the territories through the lens of fiscal autonomy. As Zhang defines it, fiscal autonomy by a government is marked by two features: (1) it is the ability of a government to decide how to raise revenue and spend its funds and (2) the extent to which the government is able to tax in accordance with its citizens’ sense of distributive equity. This is the lens, then, through which Zhang analyzes both tribal taxing authority and territorial taxing authority.
Zhang argues that on the first feature, the tribes are significantly constrained. This flows from the fact that tribes exist in intense tax competition with states. By contrast, the territories—particularly Puerto Rico—have considerably greater latitude, based in no small part on the fact that they are geographically separated from the other subnational jurisdictions (i.e., states) with which they would otherwise be in competition. As Zhang points out, both the territories and the tribes have limited participation rights as such in the democratic process of the federal government, limiting the ability of their governments to act in accordance with their citizens’ sense of distributive equity and putting greater pressure on the need to allow such governments to be able to decide how to raise revenue and spend their funds.
Overall, this is a useful lens through which to understand subnational taxation, and while Zhang discusses some degree to which this lens also applies to the states (typically in a comparative sense), a future project could explore the concept of fiscal autonomy as it applies to the states. (Indeed, this may prove a useful tool of analysis in helping shed light on existing, high-profile policy conversations around, for example, the federal deduction for state and local taxes paid or the ability of the District of Columbia to manage its own affairs.)
Zhang offers one possible solution that would help further the goal of fiscal autonomy in the territories and tribes—a dollar-for-dollar credit against the federal income tax liability for any taxes paid to a tribal or territorial government. The benefit of a dollar-for-dollar credit, Zhang argues, is that it would foster autonomy while not creating opportunities for tax shelters. This is, conceptually, an elegant solution that would be better than the status quo. However, it is not clear why this should, as Zhang argues, be included among tax credits like the child tax credit and dependent care credit. To the extent that we are thinking about tribes and territories as having sovereign (or at least, sovereign-like) capacity, it would seem most practical to enact such a credit within the already existing foreign tax credit regime by simply expanding the definition of foreign taxes to include taxes paid to territorial and tribal governments.
Doing it in this way would have at least two salutary benefits. First, it would also address potential wrinkles presented by corporations formed under the laws of a territory or tribe and taxes to which such corporations would be subject. Second, Zhang’s proposal does not address sourcing concerns. (To illustrate, imagine a bona fide resident of Puerto Rico generates income from a rental property in New York. Under Zhang’s proposal, Puerto Rico would have the primary right to tax such income—a result inconsistent with conventional sourcing rules.) Fortunately, the foreign tax credit rules have intricate rules that ensure that only taxes paid with respect to non-U.S. source income can be creditable, and there seems to be little technical reason why that existing regime could not be adapted to achieve the laudable goal that Zhang proposes.
In conclusion, however, Zhang has made a robust contribution to the literature in this area, and this is surely the beginning of a much broader conversation on these issues. Indeed, despite the level of attention and detail Zhang has given us in his article, it is clear that there is much more to say here, whether by Zhang or by others building on this project.
Here’s the rest of this week’s SSRN Tax Roundup:
Mustak Ahmed (Rajshahi), Tax Waivers-Evasion and the Crisis of Grameen Centre Governance in Bangladesh (Apr. 1, 2025)
Jeffrey L. Callen (University of Toronto), Allocating the Cost of Town Walls in Medieval Castile: A Rabbinic Analysis (Sept. 17, 2025)
Panagiotis I. Chronopoulos (University of Piraeus), Do Regulatory Changes on the Taxable Income Trigger Earnings Management Practices? Evidence From Greece, Int’l J. Acct., Auditing & Perform. Eval. (forthcoming 2025)
Tarcísio Diniz Magalhães (University of Antwerp), Allison Christians (McGill), Leyla Ates (Kadir Has), Reuven S. Avi-Yonah (Michigan), Stjepan Gadzo, Young Ran (Christine) Kim (Cardozo), Nilay Dayanç Kuzeyli (Bilkent University), Jeroen Lammers (Copenhagen Business School), Ivan Ozai (Queen’s University) & Afton Titus (University of Cape Town), Law Professors Amicus Curiae Brief in the Court of Justice of the European Union: C-519/25 – American Free Enterprise Chamber of Commerce (Nov. 19, 2025)
T. Markus Funk (White & Case LLP), Sean Lyons (White & Case LLP) & Kevin Spencer (White & Case LLP), Tax Disputes with the IRS Need an Upgrade – More ADR for Better Tax Administration (Nov. 19, 2025)
Po-Hsuan Hsu (National Tsing Hua University), Qin Li (Hong Kong Polytechnic) & Hong Wu (City University of Hong Kong), Cross-State Job Stealing (Oct. 24, 2025)
David Kamin (NYU), Tax Reform After the One Big Beautiful Bill Act, 189 Tax Notes Fed. 937 (Nov. 10, 2025)
Antonio Lopo Martinez (University of Coimbra Institute for Legal Research), Brazil’s New Transfer Pricing Regime: Intragroup Finance and Arm’s Length Under Law No. 14,596/2023 (Nov. 10, 2025)
Doron Narotzki (Akron), Manning the Barricades: How Mann Construction Redefines IRS Rulemaking and Compliance Power, 75 DePaul L. Rev. __ (forthcoming 2026).
Bernard M. Nyaga (KN Law LLP), Mastering Capital Gains Tax: Compliance Essentials in Share Transfers (Oct. 21, 2025)
Ifeanyi Chukwunonso Ogbodo (VC Aniako & Partners), Chima Chidimma (Lex Luvera Partners) & Okeroghene Ohwojero (Lex Luvera Partners), Evaluation of the Rules of Practice and Procedure of the Tax Appeal Tribunal in Nigeria (Nov. 11, 2025)
Michal Radvan (Masaryk University) & Klára Dolažalová (Masaryk University), Fair Taxation of Inheritance?, 23 Cent. Eur. Pub. Admin. Rev. 221 (2025)
Akbar Saputra (Ministry of Finance of Republic of Indonesia), Taxing the New Oil: A Feasibility Analysis of an Excise Tax on Computational Resources (Sept. 25, 2025)
Gianluca Sidoti, The Minimal State in Italy: A Proposal for Financing Through a Progressive Minimum Wealth Tax (Oct. 19, 2025)
Sonali Walpola (Australian National University), The Potential of S 100A of the Income Tax Assessment Act 1936 to Address Tax Avoidance Through Trusts, 39 Austl. Tax Forum 519 (2024)
