WAGNON, SECRETARY, KANSAS DEPARTMENT OF REVENUE v. PRAIRIE BAND POTAWATOMI NATION

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Syllabus
WAGNON, SECRETARY, KANSAS DEPARTMENT
OF REVENUE v. PRAIRIE BAND
POTAWATOMI NATION
certiorari to the united states court of appeals for
the tenth circuit
No. 04–631. Argued October 3, 2005—Decided December 6, 2005
Kansas’ motor fuel tax applies to the receipt of fuel by off-reservation
non-Indian distributors who subsequently deliver it to the gas station
owned by, and located on the Reservation of, the Prairie Band Po
tawatomi Nation (Nation). The station is meant to accommodate reser
vation traffic, including patrons driving to the casino the Nation owns
and operates there. Most of the station’s fuel is sold to such patrons,
but some sales are made to persons living or working on the reservation.
The Nation’s own tax on the station’s fuel sales generates revenue for
reservation infrastructure. The Nation sued for declaratory judgment
and injunctive relief from the State’s collection of its tax from distribu
tors delivering fuel to the reservation. Granting the State summary
judgment, the District Court determined that the balance of state, fed
eral, and tribal interests tilted in favor of the State under the test set
forth in White Mountain Apache Tribe v. Bracker, 448 U. S. 136. The
Tenth Circuit reversed, agreeing with the Nation that the Kansas tax
is an impermissible affront to its sovereignty. The court reasoned that
the Nation’s fuel revenues were derived from value generated primarily
on its reservation—i. e., the creation of a new fuel market by virtue of
the casino—and that the Nation’s interests in taxing this reservation
created value to raise revenue for reservation infrastructure out
weighed the State’s general interest in raising revenues.
Held: Because Kansas’ motor fuel tax is a nondiscriminatory tax imposed
on an off-reservation transaction between non-Indians, the tax is valid
and poses no affront to the Nation’s sovereignty. The Bracker
interest-balancing test does not apply to a tax that results from an off
reservation transaction between non-Indians. Pp. 101–115.
1. The Kansas tax is imposed on non-Indian distributors based upon
their off-reservation receipt of motor fuel, not on the on-reservation sale
and delivery of that fuel. Pp. 101–110.
(a) Under this Court’s Indian tax immunity cases, the “who” and
the “where” of a challenged tax have significant consequences. “The
initial and frequently dispositive question . . . is who bears [a tax’s] legal

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incidence,” Oklahoma Tax Comm’n v. Chickasaw Nation, 515 U. S. 450,
458 (emphasis added). Moreover, the States are categorically barred
from placing a tax’s legal incidence “on a tribe or on tribal members for
sales made inside Indian country” without congressional authorization.
Id., at 459 (emphasis added). Even when a State imposes a tax’s legal
incidence on a non-Indian seller, the tax may nonetheless be pre-empted
if the transaction giving rise to tax liability occurs on the reservation
and the imposition of the tax fails to satisfy the Bracker interest
balancing test. See, e. g., Central Machinery Co. v. Arizona Tax
Comm’n, 448 U. S. 160. Pp. 101–102.
(b) The Court rejects the Nation’s argument that it is entitled to
prevail under Chickasaw’s categorical bar because the fairest reading
of the Kansas statute is that the tax’s legal incidence actually falls on
the Tribe on the reservation. Under the statute, the tax’s incidence is
expressly imposed on the distributor that first receives the fuel. Such
“dispositive language” from the state legislature is determinative of
who bears a state excise tax’s legal incidence. Chickasaw, supra, at
461. Even absent such “dispositive language,” the Court would none
theless conclude that the tax’s legal incidence is on the distributor be
cause Kansas law makes clear that it is the distributor, not the retailer,
that is liable for the tax. The lower courts and the Kansas agency
charged with administering the motor fuel tax reached the same conclu
sion. Kaul v. State Dept. of Revenue, 266 Kan. 464, 970 P. 2d 60, distin
guished. Pp. 102–105.
(c) Also rejected is the Nation’s alternative argument that the
Bracker test must be applied irrespective of who bears the Kansas tax’s
legal incidence because the tax arises as a result of the on-reservation
sale and delivery of fuel. The Nation presented a starkly different, and
correct, interpretation of the statute in the Tenth Circuit, arguing that
the balancing test is appropriate even though the tax’s legal incidence
is imposed on the Nation’s non-Indian distributor and is triggered by
the distributor’s receipt of fuel outside the reservation. The Nation’s
argument here is rebutted by provisions of the Kansas statute demon
strating that the only taxable event occurs when the distributor first
receives the fuel and by a final determination by the State reaching the
same conclusion. The Nation’s theory that the existence of statutory
deductions for certain postreceipt transactions make it impossible for
a distributor to calculate its ultimate tax liability without knowing
whether, where, and to whom the fuel is ultimately sold or delivered
suffers from several conceptual defects. For example, availability of
the deductions does not change the nature of the taxable event, the
distributor’s receipt of the fuel. Pp. 105–110.

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2. The Tenth Circuit erred in concluding that the Kansas tax is never
theless subject to Bracker’s test. That test applies only where “a State
asserts authority over the conduct of non-Indians engaging in activity
on the reservation.” 448 U. S., at 144. It has never been applied
where, as here, a state tax imposed on a non-Indian arises from a trans
action occurring off the reservation. The Court’s Indian tax immunity
cases counsel against such an application. Pp. 110–115.
(a) Limiting the Bracker test exclusively to on-reservation transac
tions between a nontribal entity and a tribe or tribal member is consist
ent with this Court’s unique Indian tax immunity jurisprudence, which
relies “heavily on the doctrine of tribal sovereignty [giving] state law
‘no role to play’ within a tribe’s territorial boundaries,” Oklahoma Tax
Comm’n v. Sac and Fox Nation, 508 U. S. 114, 123–124. The Court has
taken an altogether different course, by contrast, when a State asserts
its taxing authority outside of Indian country. E. g., Chickasaw, supra.
In such cases, “[a]bsent express federal law to the contrary, Indians
going beyond reservation boundaries have generally been held subject
to nondiscriminatory state law otherwise applicable to all citizens of the
State.” Mescalero Apache Tribe v. Jones, 411 U. S. 145, 148–149. If a
State may apply a nondiscriminatory tax to Indians who have gone be
yond the reservation’s boundaries, it may also apply a nondiscriminatory
tax where, as here, the tax is imposed on non-Indians as a result of an
off-reservation transaction. In these circumstances, Bracker is inappli
cable. Cf. Arizona Dept. of Revenue v. Blaze Constr. Co., 526 U. S. 32,
37. The application of the test here is also inconsistent with the Court’s
efforts to establish “bright line standard[s]” in the tax administration
context. Ibid. The Nation is not entitled to interest balancing by vir
tue of its claim that the Kansas tax interferes with the Nation’s own
motor fuel tax. This is ultimately a complaint about the state tax’s
downstream economic consequences. The Nation cannot invalidate that
tax by complaining about a decrease in its revenues. See, e. g., Wash
ington v. Confederated Tribes of Colville Reservation, 447 U. S. 134,
156. Nor would the Court’s analysis change if legal significance were
accorded the Nation’s decision to label a portion of its gas station’s reve
nues as tax proceeds. See id., at 184, n. 9. Pp. 110–115.
(b) This Court rejects the Nation’s contention that the Kansas tax
is invalid notwithstanding the Bracker test’s inapplicability because it
exempts from taxation fuel sold or delivered to state and federal sover
eigns and is therefore impermissibly discriminatory. The Nation is not
similarly situated to the exempted sovereigns. While Kansas’ tax pays
for roads and bridges on the Nation’s reservation, including the main
highway used by casino patrons, Kansas offers no such services to the

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98 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
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several States or the Federal Government. Moreover, to the extent
Kansas retailers bear the tax’s cost, that burden applies equally to all
retailers within the State regardless of whether they are located on a
reservation. P. 115.
379 F. 3d 979, reversed.
Thomas, J., delivered the opinion of the Court, in which Roberts, C. J.,
and Stevens, O’Connor, Scalia, Souter, and Breyer, JJ., joined.
Ginsburg, J., filed a dissenting opinion, in which Kennedy, J., joined,
post, p. 116.
Theodore B. Olson argued the cause for petitioner. On
the briefs were Phillip Kline, Attorney General of Kansas,
and John Michael Hale, Special Assistant Attorney General.
Ian Heath Gershengorn argued the cause for respondent.
With him on the brief was David Prager III.
Deputy Solicitor General Kneedler argued the cause for
the United States as amicus curiae urging affirmance.
With him on the brief were Solicitor General Clement, Act
ing Assistant Attorney General Johnson, Jeffrey P. Minear,
M. Alice Thurston, and David C. Shilton.*
*Briefs of amici curiae urging reversal were filed for the State of South
Dakota et al. by Lawrence E. Long, Attorney General of South Dakota,
and John P. Guhin, Assistant Attorney General, and by the Attorneys
General for their respective States as follows: David W. Ma´ rquez of
Alaska, Bill Lockyer of California, Richard Blumenthal of Connecticut,
Lawrence Wasden of Idaho, Michael A. Cox of Michigan, Jeremiah W.
Nixon of Missouri, Brian Sandoval of Nevada, Patricia A. Madrid of
New Mexico, Wayne Stenehjem of North Dakota, W. A. Drew Edmondson
of Oklahoma, Thomas W. Corbett, Jr., of Pennsylvania, Mark Shurtleff of
Utah, and Pat Crank of Wyoming; for the Multistate Tax Commission by
Frank D. Katz; and for the National Association of Convenience Stores
et al. by William Perry Pendley and J. Scott Detamore.
Briefs of amici curiae urging affirmance were filed for the Hoopa Valley
Tribe et al. by Thomas P. Schlosser and Rob Roy Smith; for the Inter-
Tribal Transportation Association by Geoffrey D. Strommer, F. Michael
Willis, and Charles A. Hobbs; for the National Intertribal Tax Alliance
et al. by Richard A. Guest, Marcelino Gomez, Thomas Van Norman, Paul
W. Shagen, Marjorie B. Gell, Gary S. Pitchlynn, and O. Joseph Williams;
for NCAI et al. by Carter G. Phillips, Virginia A. Seitz, Reid Peyton

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Opinion of the Court
Justice Thomas delivered the opinion of the Court.
The State of Kansas imposes a tax on the receipt of motor
fuel by fuel distributors within its boundaries. Kansas ap
plies that tax to motor fuel received by non-Indian fuel dis
tributors who subsequently deliver that fuel to a gas station
owned by, and located on, the Reservation of the Prairie
Band Potawatomi Nation (Nation). The Nation maintains
that this application of the Kansas motor fuel tax is an im
permissible affront to its sovereignty. The Court of Appeals
agreed, holding that the application of the Kansas tax to fuel
received by a non-Indian distributor, but subsequently deliv
ered to the Nation, was invalid under the interest-balancing
test set forth in White Mountain Apache Tribe v. Bracker,
448 U. S. 136 (1980). But the Bracker interest-balancing
test applies only where “a State asserts authority over the
conduct of non-Indians engaging in activity on the reserva
tion.” Id., at 144. It does not apply where, as here, a state
tax is imposed on a non-Indian and arises as a result of
a transaction that occurs off the reservation. Accordingly,
we reverse.
I
The Nation is a federally recognized Indian Tribe whose
reservation is on United States trust land in Jackson County,
Kansas. The Nation owns and operates a casino on its res
ervation. In order to accommodate casino patrons and other
reservation-related traffic, the Nation constructed, and now
owns and operates, a gas station on its reservation next to
the casino. Seventy-three percent of the station’s fuel sales
are made to casino patrons, while 11 percent of the station’s
fuel sales are made to persons who live or work on the reser
vation. The Nation purchases fuel for its gas station from
non-Indian distributors located off its reservation. Those
distributors pay a state fuel tax on their initial receipt of
Chambers, and Riyaz A. Kanji; and for the Sac and Fox Nation of Missouri
in Kansas and Nebraska et al. by Thomas Weathers.

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motor fuel, Kan. Stat. Ann. § 79–3408 (2003 Cum. Supp.),1 and
pass along the cost of that tax to their customers, including
the Nation.2
The Nation sells its fuel within 2 cents per gallon of the
prevailing market price. Prairie Band Potawatomi Nation
v. Richards, 379 F. 3d 979, 982 (CA10 2004). It does so not
withstanding the distributor’s decision to pass along the cost
of the State’s fuel tax to the Nation, and the Nation’s decision
to impose its own tax on the station’s fuel sales in the amount
of 16 cents per gallon of gasoline and 18 cents per gallon of
diesel (increased to 20 cents for gasoline and 22 cents for
diesel in January 2003). Ibid. The Nation’s fuel tax gener
ates approximately $300,000 annually, funds that the Nation
uses for “ ‘constructing and maintaining roads, bridges and
rights-of-way located on or near the Reservation,’ ” including
the access road between the state-funded highway and the
casino. Ibid.
The Nation brought an action in Federal District Court for
declaratory judgment and injunctive relief from the State’s
collection of motor fuel tax from distributors who deliver fuel
to the reservation. The District Court granted summary
judgment in favor of the State. Applying the Bracker
interest-balancing test, it determined that the balance of
state, federal, and tribal interests tilted in favor of the State.
The court reached this determination because “it is undis
puted that the legal incidence of the tax is directed off
reservation at the fuel distributors,” Prairie Band Potawa
tomi Nation v. Richards, 241 F. Supp. 2d 1295, 1311 (Kan.
1 The Kansas Legislature recently amended the fuel tax statute. 2005
Kan. Sess. Laws ch. 46. The text of the sections to which we refer re
mains the same, although the subsection numbers have changed. For con
sistency, our subsection references are to the 2003 version applied by the
lower courts and cited by the parties.
2 The record does not clearly establish whether the distributor passed
along the cost of the tax to the Nation’s gas station. At oral argument,
petitioner acknowledged that the record was unclear, but represented that
the distributor was in fact passing along the cost of the tax to the Nation.

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Opinion of the Court
2003), and because the ultimate purchasers of the fuel, non-
Indian casino patrons, receive the bulk of their governmental
services from the State, id., at 1309. The court held that
the State’s tax did not interfere with the Nation’s right of
self-government, adding that “a tribe cannot oust a state
from any power to tax on-reservation purchases by nonmem
bers of the tribe by simply imposing its own tax on the trans
actions or by otherwise earning its revenues from the tribal
business.” Id., at 1311.
The Court of Appeals for the Tenth Circuit reversed. 379
F. 3d 979 (2004). It determined that, under Bracker, the
balance of state, federal, and tribal interests favored the
Tribe. The Tenth Circuit reasoned that the Nation’s fuel
revenues were “derived from value generated primarily on
its reservation,” 379 F. 3d, at 984—namely, the creation of a
new fuel market by virtue of the presence of the casino—and
that the Nation’s interests in taxing this reservation-created
value to raise revenue for reservation infrastructure out
weighed the State’s “general interest in raising revenues,”
id., at 986. We granted certiorari, 543 U. S. 1186 (2005), and
now reverse.
II
Although we granted certiorari to determine whether
Kansas may tax a non-Indian distributor’s off-reservation
receipt of fuel without being subject to the Bracker interest
balancing test, Pet. for Cert. i, the Nation maintains that
Kansas’ “tax is imposed not on the off-reservation receipt of
fuel, but on its on-reservation sale and delivery,” Brief for
Respondent 11 (emphasis in original). As the Nation recog
nizes, under our Indian tax immunity cases, the “who” and
the “where” of the challenged tax have significant conse
quences. We have determined that “[t]he initial and fre
quently dispositive question in Indian tax cases . . . is who
bears the legal incidence of [the] tax,” Oklahoma Tax
Comm’n v. Chickasaw Nation, 515 U. S. 450, 458 (1995) (em
phasis added), and that the States are categorically barred

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from placing the legal incidence of an excise tax “on a tribe
or on tribal members for sales made inside Indian country”
without congressional authorization, id., at 459 (emphasis
added). We have further determined that, even when a
State imposes the legal incidence of its tax on a non-Indian
seller, the tax may nonetheless be pre-empted if the trans
action giving rise to tax liability occurs on the reservation
and the imposition of the tax fails to satisfy the Bracker
interest-balancing test. See 448 U. S. 136 (holding that
state taxes imposed on on-reservation logging and hauling
operations by non-Indian contractor are invalid under the
interest-balancing test); cf. Central Machinery Co. v. Ari
zona Tax Comm’n, 448 U. S. 160 (1980) (holding that the
Indian trader statutes pre-empted Arizona’s tax on a non-
Indian seller’s on-reservation sales).
The Nation maintains that it is entitled to prevail under
the categorical bar articulated in Chickasaw because “[t]he
fairest reading of the statute is that the legal incidence of
the tax actually falls on the Tribe [on the reservation].”
Brief for Respondent 17, n. 5. The Nation alternatively
maintains it is entitled to prevail even if the legal incidence
of the tax is on the non-Indian distributor because, according
to the Nation, the tax arises out of a distributor’s on
reservation transaction with the Tribe and is therefore sub
ject to the Bracker balancing test. Brief for Respondent 15.
We address the “who” and the “where” of Kansas’ motor fuel
tax in turn.
A
Kansas law specifies that “the incidence of [the motor fuel]
tax is imposed on the distributor of the first receipt of
the motor fuel.” Kan. Stat. Ann. § 79–3408(c) (2003 Cum.
Supp.). We have suggested that such “dispositive language”
from the state legislature is determinative of who bears the
legal incidence of a state excise tax. Chickasaw, supra, at
461. But even if the state legislature had not employed such
“dispositive language,” thereby requiring us instead to look

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to a “fair interpretation of the taxing statute as written and
applied,” California Bd. of Equalization v. Chemehuevi
Tribe, 474 U. S. 9, 11 (1985) (per curiam), we would nonethe
less conclude that the legal incidence of the tax is on the
distributor.
Kansas law makes clear that it is the distributor, rather
than the retailer, that is liable to pay the motor fuel tax.
Section 79–3410(a) (1997) provides, in relevant part, that
“[e]very distributor . . . shall compute and shall pay to the
director . . . the amount of [motor fuel] taxes due to the
state.” While the distributors are “entitled” to pass along
the cost of the tax to downstream purchasers, see § 79–3409
(2003 Cum. Supp.), they are not required to do so. In sum,
the legal incidence of the Kansas motor fuel tax is on the
distributor. The lower courts reached the same conclusion.
379 F. 3d, at 982 (“The Kansas legislature structured the tax
so that its legal incidence is placed on non-Indian distribu
tors”); 241 F. Supp. 2d, at 1311 (“[I]t is undisputed that the
legal incidence of the tax is directed off-reservation at the
fuel distributors”); see also Sac and Fox Nation of Missouri
v. Pierce, 213 F. 3d 566, 578 (CA10 2000) (“[T]he legal inci
dence of the [Kansas] tax law as presently written falls on
the fuel distributors rather than on the Tribes”); Winnebago
Tribe of Nebraska v. Kline, 297 F. Supp. 2d 1291, 1294 (Kan.
2004) (“Under the Kansas statutory scheme, the legal inci
dence of the state’s fuel tax falls on the ‘distributor of first
receipt’ of such fuel”); Sac and Fox Nation of Missouri v.
LaFaver, 31 F. Supp. 2d 1298, 1307 (Kan. 1998) (“[T]he stat
utes are extremely clear in providing that the tax in question
is imposed upon the distributor”). And the Kansas Depart
ment of Revenue, the state agency charged with administer
ing the motor fuel tax, has concluded likewise. See Letter
from David J. Heinemann, Office of Administrative Appeals,
to Mark A. Burghart, Written Final Determination in Re
quest for Informal Conference for Reconsideration of Agency
Action, Davies Oil Co., Inc., Docket No. 01–970 (Jan. 3, 2002)

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(hereinafter Kansas Dept. of Revenue Letter) (“The legal
incidence of the Kansas fuel tax rests with Davies, the dis
tributor, who is up-stream from Nation, the retailer”).
The United States, as amicus, contends that this conclu
sion is foreclosed by the Kansas Supreme Court’s decision in
Kaul v. State Dept. of Revenue, 266 Kan. 464, 970 P. 2d 60
(1998). The United States reads Kaul as holding that the
legal incidence of Kansas’ motor fuel tax rests on the Indian
retailers, rather than on the non-Indian distributors. And,
under the United States’ view, so long as the Kansas Su
preme Court’s “ ‘definitive determination as to the operating
incidence’ ” of its fuel tax is “ ‘consistent with the statute’s
reasonable interpretation,’ ” it should be “ ‘deemed conclu
sive.’ ” Brief for United States as Amicus Curiae 10 (quot
ing Gurley v. Rhoden, 421 U. S. 200, 208 (1975)).
We disagree with the United States’ interpretation of
Kaul. In Kaul, two members of the Citizen Band Potawa
tomi Tribe of Oklahoma sought to enjoin the enforcement of
Kansas’ fuel tax on fuel delivered to their gas station located
on the Prairie Band Potawatomi Tribe of Kansas’ Reserva
tion. The Kansas Supreme Court determined that the sta
tion owners had standing to challenge the tax because the
statute provided that the distributor was entitled to “ ‘charge
and collect such tax . . . as a part of the selling price.’ ”
Kaul, supra, at 474, 970 P. 2d, at 67 (quoting Kan. Stat. Ann.
§ 79–3409 (1995); emphasis deleted). The court determined
that the station owners were not entitled to an injunction,
however, because they were not members of a Kansas tribe
and thus there had “been no showing by Retailers that
payment of fuel tax to Kansas interferes with the self
government of a Kansas tribe or a Kansas tribal member.”
266 Kan., at 477, 970 P. 2d, at 69. The court then noted that
“the legal incidence of the tax on motor fuel rests on non
tribal members and does not affect the Potawatomi Indian
reservation within the state of Kansas.” Ibid.

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Kaul does not foreclose our determination that the distrib
utor bears the legal incidence of the Kansas motor fuel tax.
As an initial matter, it is unclear whether the court’s refer
ence to “nontribal members” is a reference to the non-tribal
member retailers or the non-tribal-member distributors. At
the very least, Kaul’s imprecise language cannot be charac
terized as a definitive determination. Moreover, the 1998
amendments to the Kansas fuel provisions, including the
amendment to § 79–3408(c) that provides that “the incidence
of this tax is imposed on the distributor,” were not applied
in Kaul. Id., at 473, 970 P. 2d, at 66 (identifying provisions
that were repealed in 1998 as being “in effect during the
period relevant to this case”); id., at 474, 970 P. 2d, at 67
(noting that a “critical statute” to its holding was the 1995
version of § 79–3409, which was amended in 1998). Accord
ingly, Kaul did not speak authoritatively on the provisions
before us today.
B
The Nation maintains that we must apply the Bracker
interest-balancing test, irrespective of the identity of the
taxpayer (i. e., the party bearing the legal incidence), be
cause the Kansas fuel tax arises as a result of the on
reservation sale and delivery of the motor fuel. See Brief
for Respondent 15. Notably, however, the Nation presented
a starkly different interpretation of the statute in the pro
ceedings before the Court of Appeals, arguing that “[t]he
balancing test is appropriate even though the legal incidence
of the tax is imposed on the Nation’s non-Indian distributor
and is triggered by the distributor’s receipt of fuel outside
the reservation.” Appellant’s Reply Brief in No. 03–3218
(CA10), p. 3 (emphasis added); see also 241 F. Supp. 2d, at
1311 (District Court observing that “it is undisputed that the
legal incidence of the tax is directed off-reservation at the
fuel distributors”). A “fair interpretation of the taxing stat
ute as written and applied,” Chemehuevi Tribe, 474 U. S., at

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11, confirms that the Nation’s interpretation of the statute
before the Court of Appeals was correct.
As written, the Kansas fuel tax provisions state that “the
incidence of this tax is imposed on the distributor of the first
receipt of the motor fuel and such taxes shall be paid but
once. Such tax shall be computed on all motor-vehicle fuels
or special fuels received by each distributor, manufacturer
or importer in this state and paid in the manner provided
for herein . . . .” Kan. Stat. Ann. § 79–3408(c) (2003 Cum.
Supp.). Under this provision, the distributor who initially
receives the motor fuel is liable for payment of the fuel tax,
and the distributor’s tax liability is determined by calculat
ing the amount of fuel received by the distributor.
Section 79–3410(a) (1997) confirms that it is the distribu
tor’s off-reservation receipt of the motor fuel, and not any
subsequent event, that establishes tax liability. That sec
tion provides:
“[E]very distributor, manufacturer, importer, exporter
or retailer of motor-vehicle fuels or special fuels, on or
before the 25th day of each month, shall render to the
director . . . a report certified to be true and correct
showing the number of gallons of motor-vehicle fuels or
special fuels received by such distributor, manufacturer,
importer, exporter or retailer during the preceding cal
endar month . . . . Every distributor, manufacturer or
importer within the time herein fixed for the rendering
of such reports, shall compute and shall pay to the direc
tor at the director’s office the amount of taxes due to
the state on all motor-vehicle fuels or special fuels re
ceived by such distributor, manufacturer or importer
during the preceding calendar month.”
Thus, Kansas law expressly provides that a distributor’s
monthly tax obligations are determined by the amount of
fuel received by the distributor during the preceding month.
See Kline, 297 F. Supp. 2d, at 1294 (“The distributor must

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compute and remit the tax each month for the fuel received
by the distributor in the State of Kansas”).
The Nation disagrees. It contends that what is taxed is
not the distributors’ (off-reservation) receipt of the fuel, but
rather the distributors’ use, sale, or delivery of the motor
fuel—in this case, the distributors’ (on-reservation) sale or
delivery to the Nation. The Nation grounds support for this
proposition in § 79–3408(a) (2003 Cum. Supp.). That section
provides that “[a] tax . . . is hereby imposed on the use, sale
or delivery of all motor vehicle fuels or special fuels which
are used, sold or delivered in this state for any purpose what
soever.” But this section cannot be read in isolation. If it
were, it would permit Kansas to tax the same fuel multiple
times—namely, every time fuel is sold, delivered, or used.
Section 79–3408(a) must be read in conjunction with subsec
tion (c), which specifies that “the incidence of this tax is im
posed on the distributor of the first receipt of the motor fuel
and such taxes shall be paid but once.” (Emphasis added.)
The identity of the single, taxable event is revealed in the
very next sentence of subsection (c), which provides that
“[s]uch tax shall be computed on all . . . fuels received by
each distributor.” (Emphasis added.) In short, the “use,
sale or delivery” that triggers tax liability is the sale or de
livery of the fuel to the distributor. The Kansas Depart
ment of Revenue has issued a final determination reaching
the same conclusion. See Kansas Dept. of Revenue Letter
(“[P]ursuant to the Kansas Motor Fuel Tax Act . . . the state
fuel tax was imposed on Davies, a distributor, when Davies
first received the fuel at its business, a site located off of
Nation’s reservation” (emphasis added)).
The Nation claims further support for its interpretation
of the statute in § 79–3408(d) (2003 Cum. Supp.). Section
79–3408(d) permits distributors to obtain deductions from
the Kansas motor fuel tax for certain postreceipt transac
tions, such as sale or delivery of fuel for export from the
State and sale or delivery of fuel to the United States.

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§§ 79–3408(d)(1)–(2). The Nation argues that these exemp
tions make it impossible for a distributor to calculate its “ul
timate tax liability” without knowing “whether, where, and
to whom the fuel is ultimately sold or delivered.” Brief for
Respondent 15. The Nation infers from these provisions
that the taxable event is actually the distributors’ postre
ceipt delivery of fuel to retailers such as the Nation, rather
than the distributors’ initial receipt of the fuel.
The Nation’s theory suffers from a number of conceptual
defects. First, under Kansas law, a distributor must pay the
tax even for fuel that sits in its inventory—fuel that is not
(or at least has not yet been) used, sold, or delivered by the
distributor.3 But the Nation’s interpretation presumes that
the tax is owed only on a distributor’s postreceipt use, sale,
or delivery of fuel. As this interpretation cannot be recon
ciled with the manner in which the Kansas motor fuel tax is
3 This understanding of the application of the Kansas fuel tax is con
firmed by the form that fuel distributors are required to fill out each month
pursuant to Kan. Stat. Ann. § 79–3410 (1997). See Kansas Form MF–52,
available at http://www.ksrevenue.org/pdf/forms/mf52.pdf (as visited Nov.
21, 2005, and available in Clerk of Court’s case file). The form instructs
distributors to enter in line 1 “the total net gallons of gasoline, gasohol
and special fuel received or imported” during the preceding month. Id.,
at 2. The distributors may then “[e]nter the deductions that apply to your
business” in lines 2(a)-to-(e) for the preceding month. Those deductions
include “[n]et gallons of fuel exported from Kansas,” “[n]et gallons of fuel
sold to the U. S. Government,” “[n]et gallons of fuel sold for aviation pur
poses,” and “[n]et gallons of dyed diesel fuel received for the month,” the
very deductions described in § 79–3408(d), ibid. (emphasis in original).
The distributor’s tax liability is then calculated by subtracting the total
deductions from the total fuel received, and applying the 2.5 percent han
dling allowance to the difference. Thus, the event that generates a dis
tributor’s tax liability is its receipt of fuel. And the distributor must pay
tax on that fuel even if it is not subsequently delivered or sold. While a
distributor may decrease its tax liability by engaging in transactions that
entitle it to deductions, such as by selling or delivering fuel to an exempt
entity like the United States, its tax liability is unaffected by sales or
deliveries to nonexempt entities like the Nation.

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actually applied, it must be rejected.4 Second, the availabil
ity of tax deductions does not change the nature of the tax
able event, here the distributor’s receipt of the fuel. By
analogy, an individual federal income taxpayer may reduce
his tax liability by paying home mortgage interest. But
that entitlement does not render the taxable event anything
other than the receipt of income by the taxpayer. See
26 U. S. C. § 1 (2000 ed. and Supp. II), § 163(h) (2000 ed.);
cf. North American Oil Consol. v. Burnet, 286 U. S. 417,
424 (1932) (federal income tax liability arises when “a tax
payer . . . has received income”).
Finally, the Nation contends that its interpretation of the
statute is supported by Kan. Stat. Ann. § 79–3417 (1997),
which permits a refund—in certain circumstances—for de
stroyed fuel. However, the Nation’s interpretation is actu
ally foreclosed by that section. Section 79–3417 entitles a
distributor to a “refund from the state of the amount of
motor-vehicle fuels or special fuels tax paid on any . . . fuels
of 100 gallons or more in quantity, which are lost or de
stroyed at any one time while such distributor is the owner
thereof,” provided the distributor supplies the required noti
fication and documentation to the State. This section illus
trates that a distributor pays taxes for fuel in its possession
that it has not delivered or sold, and is only entitled to the
refund described in this section for tax it has already paid
4 Indeed, the dissent acknowledges that tax is owed on fuel a distributor
receives and holds in inventory—and thus implicitly concedes that the dis
tributors’ off-reservation receipt of motor fuel is the event that gives rise
to tax liability. See post, at 120 (opinion of Ginsburg, J.). While the
dissent contends that such tax is ultimately “effectively offset” by a subse
quent delivery of the inventoried fuel, ibid., the dissent does not explain
the meaning of this opaque contention. A distributor’s subsequent deliv
ery of fuel to the Nation or any other fuel retailer in Kansas has no effect
on tax that it has already paid in a preceding month. Indeed, the distrib
utor does not report delivery to retailers on its monthly tax return. See
Kansas Form MF–52. And a distributor must pay the tax even if the fuel
is never delivered.

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on fuel that is subsequently destroyed. While this section
does not specify the event that gives rise to the distributor’s
tax liability, it forecloses the Nation’s contention that such
liability does not arise until fuel is sold or delivered to a
nonexempt entity.
III
Although Kansas’ fuel tax is imposed on non-Indian dis
tributors based upon those distributors’ off-reservation re
ceipt of motor fuel, the Tenth Circuit concluded that the tax
was nevertheless still subject to the interest-balancing test
this Court set forth in Bracker, 448 U. S. 136. As Bracker
itself explained, however, we formulated the balancing test
to address the “difficult questio[n]” that arises when “a State
asserts authority over the conduct of non-Indians engaging
in activity on the reservation.” Id., at 144–145 (emphasis
added). The Bracker interest-balancing test has never been
applied where, as here, the State asserts its taxing authority
over non-Indians off the reservation. And although we have
never addressed this precise issue, our Indian tax immunity
cases counsel against such an application.
A
We have applied the balancing test articulated in Bracker
only where “the legal incidence of the tax fell on a nontribal
entity engaged in a transaction with tribes or tribal mem
bers,” Arizona Dept. of Revenue v. Blaze Constr. Co., 526
U. S. 32, 37 (1999), on the reservation. See Bracker, supra
(motor carrier license and use fuel taxes imposed on on
reservation logging and hauling operations by non-Indian
contractor); Department of Taxation and Finance of N. Y. v.
Milhelm Attea & Bros., 512 U. S. 61 (1994) (various taxes
imposed on non-Indian purchasers of goods retailed on
reservation); Cotton Petroleum Corp. v. New Mexico, 490
U. S. 163 (1989) (state severance tax imposed on non-Indian
lessee’s on-reservation production of oil and gas); Ramah
Navajo School Bd., Inc. v. Bureau of Revenue of N. M., 458

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U. S. 832 (1982) (state gross receipts tax imposed on private
contractor’s proceeds from the construction of a school on the
reservation); Washington v. Confederated Tribes of Colville
Reservation, 447 U. S. 134 (1980) (cigarette and sales taxes
imposed on on-reservation purchases by nonmembers);
Central Machinery Co., 448 U. S. 160 (tax imposed on on
reservation sale of farm machinery to Tribe). Similarly, the
cases identified in Bracker as supportive of the balancing
test were exclusively concerned with the on-reservation con
duct of non-Indians. See Warren Trading Post Co. v. Ari
zona Tax Comm’n, 380 U. S. 685 (1965) (gross proceeds tax
imposed on non-Indian retailer on Navajo Indian Reserva
tion); Thomas v. Gay, 169 U. S. 264 (1898) (state property tax
imposed on cattle owned by non-Indian lessees of tribal
land); Williams v. Lee, 358 U. S. 217 (1959) (holding the state
courts lacked jurisdiction over dispute between non-Indian,
on-reservation retailer and Indian debtors).5
5 Our recent discussion in Oklahoma Tax Comm’n v. Chickasaw Nation,
515 U. S. 450 (1995), regarding the application of the interest-balancing
test to motor fuel taxes is not to the contrary. In Chickasaw, we noted
in dicta that, “if the legal incidence of the tax rests on non-Indians, no
categorical bar prevents enforcement of the tax; if the balance of federal,
state, and tribal interests favors the State, and federal law is not to the
contrary, the State may impose its levy, and may place on a tribe or tribal
members ‘minimal burdens’ in collecting the toll.” Id., at 459 (citation
omitted). Chickasaw did not purport to expand the applicability of White
Mountain Apache Tribe v. Bracker, 448 U. S. 136 (1980), to an off
reservation tax on non-Indians. Indeed, the quoted sentence reveals that
Chickasaw discussed the applicability of the interest-balancing test in the
context of a tax that is collected by the tribe—a tax that necessarily arises
from on-reservation conduct.
Moreover, in purporting to craft a “ ‘bright-line standard’ ” in that case,
we noted that Oklahoma “generally is free” to impose the legal incidence
of its motor fuel tax on the consumer—who purchases fuel on the reserva
tion—and then require the Indian retailers to “ ‘collect and remit the
levy.’ ” 515 U. S., at 460. If Oklahoma would have been free to impose
the legal incidence of its fuel tax downstream from the Indian retailers,
then Kansas should be equally free to impose the legal incidence of its fuel
tax upstream from Indian retailers notwithstanding the applicability of

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Limiting the interest-balancing test exclusively to on
reservation transactions between a nontribal entity and a
tribe or tribal member is consistent with our unique Indian
tax immunity jurisprudence. We have explained that this
jurisprudence relies “heavily on the doctrine of tribal sover
eignty . . . which historically gave state law ‘no role to play’
within a tribe’s territorial boundaries.” Oklahoma Tax
Comm’n v. Sac and Fox Nation, 508 U. S. 114, 123–124 (1993)
(quoting McClanahan v. Arizona Tax Comm’n, 411 U. S.
164, 168 (1973)). We have further explained that the doc
trine of tribal sovereignty, which has a “significant geograph
ical component,” Bracker, supra, at 151, requires us to “re
vers[e]” the “ ‘general rule’ ” that “ ‘exemptions from tax
laws should . . . be clearly expressed.’ ” Sac and Fox, supra,
at 124 (quoting McClanahan, supra, at 176). And we have
determined that the geographical component of tribal sover
eignty “ ‘provide[s] a backdrop against which the applicable
treaties and federal statutes must be read.’ ” Sac and Fox,
supra, at 124 (quoting McClanahan, supra, at 172). Indeed,
the particularized inquiry we set forth in Bracker relied spe
cifically on that backdrop. See 448 U. S., at 144–145 (noting
that where “a State asserts authority over the conduct of
non-Indians engaging in activity on the reservation . . . we
have examined the language of the relevant federal treaties
and statutes in terms of both the broad policies that underlie
them and the notions of sovereignty that have developed
from historical traditions of tribal independence” (emphasis
added)).
We have taken an altogether different course, by contrast,
when a State asserts its taxing authority outside of Indian
country. Without applying the interest-balancing test, we
the interest-balancing test. Indeed, the Chickasaw dicta should apply
a fortiori here; the upstream approach is less burdensome on the Tribe
because it does not include the collecting and remitting requirements that
typically, and permissibly, accompany a consumer tax.

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have permitted the taxation of the gross receipts of an off
reservation, Indian-owned ski resort, Mescalero Apache
Tribe v. Jones, 411 U. S. 145 (1973), and the taxation of in
come earned by Indians working on reservation but living
off reservation, Chickasaw, 515 U. S. 450. In these cases,
we have concluded that “[a]bsent express federal law to the
contrary, Indians going beyond reservation boundaries have
generally been held subject to nondiscriminatory state law
otherwise applicable to all citizens of the State.” Mescalero
Apache, supra, at 148–149; Chickasaw, supra, at 465 (quot
ing Mescalero Apache, supra, at 148–149). If a State may
apply a nondiscriminatory tax to Indians who have gone be
yond the boundaries of the reservation, then it follows that
it may apply a nondiscriminatory tax where, as here, the tax
is imposed on non-Indians as a result of an off-reservation
transaction. In these circumstances, the interest-balancing
test set forth in Bracker is inapplicable. Cf. Blaze Constr.,
526 U. S., at 37 (declining to apply the Bracker interest
balancing test “where a State seeks to tax a transaction
[on reservation] between the Federal Government and its
non-Indian private contractor”).
The application of the interest-balancing test to the Kan
sas motor fuel tax is not only inconsistent with the special
geographic sovereignty concerns that gave rise to that test,
but also with our efforts to establish “bright-line stand
ard[s]” in the context of tax administration. 526 U. S., at
37 (“The need to avoid litigation and to ensure efficient tax
administration counsels in favor of a bright-line standard for
taxation of federal contracts, regardless of whether the
contracted-for activity takes place on Indian reservations”);
cf. Chickasaw, supra, at 460 (noting that the legal incidence
test “ ‘provide[s] a reasonably bright-line standard’ ”);
County of Yakima v. Confederated Tribes and Bands of
Yakima Nation, 502 U. S. 251, 267–268 (1992). Indeed, we
have recognized that the Bracker interest-balancing test

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“only cloud[s] ” our efforts to establish such standards.
Blaze Constr., supra, at 37. Under the Nation’s view, how
ever, any off-reservation tax imposed on the manufacture or
sale of any good imported by the Nation or one of its mem
bers would be subject to interest balancing. Such an expan
sion of the application of the Bracker test is not supported
by our cases.
Nor is the Nation entitled to interest balancing by virtue
of its claim that the Kansas motor fuel tax interferes with its
own motor fuel tax. As an initial matter, this is ultimately a
complaint about the downstream economic consequences of
the Kansas tax. As the owner of the station, the Nation
will keep every dollar it collects above its operating costs.
Given that the Nation sells gas at prevailing market rates,
its decision to impose a tax should have no effect on its net
revenues from the operation of the station; it should not mat
ter whether those revenues are labeled “profits” or “tax pro
ceeds.” The Nation merely seeks to increase those reve
nues by purchasing untaxed fuel. But the Nation cannot
invalidate the Kansas tax by complaining about a decrease
in revenues. See Colville, 447 U. S., at 156 (“Washington
does not infringe the right of reservation Indians to ‘make
their own laws and be ruled by them,’ Williams v. Lee, 358
U. S. 217, 220 (1959), merely because the result of imposing
its taxes will be to deprive the Tribes of revenues which they
currently are receiving”). Nor would our analysis change if
we accorded legal significance to the Nation’s decision to
label a portion of the station’s revenues as tax proceeds.
See id., at 184, n. 9 (Rehnquist, J., concurring in part, concur
ing in result in part, and dissenting in part) (“When two
sovereigns have legitimate authority to tax the same trans
action, exercise of that authority by one sovereign does not
oust the jurisdiction of the other. If it were otherwise, we
would not be obligated to pay federal as well as state taxes
on our income or gasoline purchases. Economic burdens on

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the competing sovereign . . . do not alter the concurrent na
ture of the taxing authority”).6
B
Finally, the Nation contends that the Kansas motor fuel
tax is invalid notwithstanding the inapplicability of the
interest-balancing test, because it “exempts from taxation
fuel sold or delivered to all other sovereigns,” and is there
fore impermissibly discriminatory. Brief for Respondent
17–20 (emphasis deleted); Kan. Stat. Ann. §§ 79–3408(d)(1)–
(2) (2003 Cum. Supp.). But the Nation is not similarly situ
ated to the sovereigns exempted from the Kansas fuel tax.
While Kansas uses the proceeds from its fuel tax to pay for
a significant portion of the costs of maintaining the roads
and bridges on the Nation’s reservation, including the main
highway used by the Nation’s casino patrons, Kansas offers
no such services to the several States or the Federal Govern
ment. Moreover, to the extent Kansas fuel retailers bear
the cost of the fuel tax, that burden falls equally upon all
retailers within the State regardless of whether those retail
ers are located on an Indian reservation. Accordingly, the
Kansas motor fuel tax is not impermissibly discriminatory.
* * *
For the foregoing reasons, we hold that the Kansas motor
fuel tax is a nondiscriminatory tax imposed on an off
reservation transaction between non-Indians. Accordingly,
the tax is valid and poses no affront to the Nation’s sover
eignty. The judgment of the Court of Appeals is reversed.
It is so ordered.
6 These authorities also foreclose the Nation’s contention that the Kansas
motor fuel tax is invalid, irrespective of the applicability of Bracker, 448
U. S. 136, because it interferes with the Nation’s right to self-government.
See Brief for Respondent 45–47.

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116 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Ginsburg, J., dissenting
Justice Ginsburg, with whom Justice Kennedy joins,
dissenting.
The Kansas fuel tax at issue is imposed on distributors,
passed on to retailers, and ultimately paid by gas station
customers. Out-of-state sales are exempt, as are sales to
other distributors, the United States, and U. S. Government
contractors. Fuel lost or destroyed, and thus not sold, is
also exempt. But no statutory exception attends sales to
Indian tribes or their members. Kan. Stat. Ann. §§ 79–3408;
79–3409; 79–3417 (1997 and 2003 Cum. Supp.).
The Prairie Band Potawatomi Nation (hereinafter Nation)
maintains a casino and related facilities on its reservation.
On nearby tribal land, as an adjunct to its casino, the Nation
built, owns, and operates a gas station known as the Nation
Station. Some 73% of the Nation Station’s customers are
casino patrons or employees. Prairie Band Potawatomi
Nation v. Richards, 379 F. 3d 979, 982 (CA10 2004). The
Nation imposes its own tax on fuel sold at the Nation Sta
tion, pennies per gallon less than Kansas’ tax. Ibid.1
Both the Nation and the State have authority to tax
fuel sales at the Nation Station. See Merrion v. Jicarilla
Apache Tribe, 455 U. S. 130, 137 (1982) (describing “[t]he
power to tax [as] an essential attribute of Indian sover
eignty[,] . . . a necessary instrument of self-government and
territorial management,” which “enables a tribal govern
ment to raise revenues for its essential services”). As a
practical matter, however, the two tolls cannot coexist. 379
F. 3d, at 986. If the Nation imposes its tax on top of Kansas’
tax, then unless the Nation operates the Nation Station at
a substantial loss, scarcely anyone will fill up at its pumps.
Effectively double-taxed, the Nation Station must operate as
an unprofitable venture, or not at all. In these circum
1 The Federal Government also imposes a tax on the “removal, entry, or
sale” of all motor fuel. 26 U. S. C. § 4081(a)(1). Neither the State nor
the Nation contests the applicability of this tax to fuel destined for the
Nation Station.

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stances, which tax is paramount? Applying the interest
balancing approach described in White Mountain Apache
Tribe v. Bracker, 448 U. S. 136 (1980), the Court of Appeals
for the Tenth Circuit held that “the Kansas tax, as applied
here, is preempted because it is incompatible with and out
weighed by the strong tribal and federal interests against
the tax.” 379 F. 3d, at 983. I agree and would affirm the
Court of Appeals’ judgment.
I
Understanding Bracker is key to the inquiry here.
Bracker addressed the question whether a State should be
preempted from collecting otherwise lawful taxes from non-
Indians in view of the burden consequently imposed upon a
tribe or its members. In that case, Arizona sought to en
force its fuel-use and vehicle-license taxes against a non-
Indian enterprise that contracted with the White Mountain
Apache Tribe to harvest timber from reservation forests.
448 U. S., at 138–140. The Court recognized that Arizona’s
levies raised difficult questions concerning “the bounda
ries between state regulatory authority and tribal self
government.” Id., at 141. Determining whether taxes for
mally imposed on non-Indians are preempted, the Court
instructed, should not turn “on mechanical or absolute
conceptions of state or tribal sovereignty, but [calls] for a
particularized inquiry into the nature of the state, federal,
and tribal interests at stake.” Id., at 145. This inquiry is
“designed to determine whether, in the specific context, the
exercise of state authority would violate federal law,” ibid.,
or “unlawfully infringe ‘on the right of reservation Indians
to make their own laws and be ruled by them,’ ” id., at 142
(quoting Williams v. Lee, 358 U. S. 217, 220 (1959)). Apply
ing the interest-balancing approach, the Court concluded
that “the proposed exercise of state authority [was] imper
missible” because “it [was] undisputed that the economic bur
den of the asserted taxes will ultimately fall on the Tribe,”

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Ginsburg, J., dissenting
“the Federal Government has undertaken comprehensive
regulation of the harvesting and sale of tribal timber,” and
the state officials were “unable to justify the taxes except
in terms of a generalized interest in raising revenue.” 448
U. S., at 151.
The Court has repeatedly applied the interest-balancing
approach described in Bracker in evaluating claims that
state taxes levied on non-Indians should be preempted be
cause they undermine tribal and federal interests.2 In
many cases, both pre- and post-Bracker, a balancing analysis
has yielded a decision upholding application of the state tax
in question. See, e. g., Cotton Petroleum Corp. v. New Mex
ico, 490 U. S. 163, 183–187 (1989) (State permitted to impose
a severance tax on a non-Indian company that leased tribal
land for oil and gas production); Washington v. Confederated
Tribes of Colville Reservation, 447 U. S. 134, 154–159 (1980)
(State permitted to tax non-Indians’ purchases of cigarettes
from on-reservation tribal retailers); Moe v. Confederated
Salish and Kootenai Tribes of Flathead Reservation, 425
U. S. 463, 481–483 (1976) (same). Sometimes, however, par
ticularized inquiry has resulted in a holding that federal
or tribal interests are superior. See, e. g., Ramah Navajo
School Bd., Inc. v. Bureau of Revenue of N. M., 458 U. S.
832, 843–846 (1982) (State prohibited from imposing gross
receipts tax on a non-Indian contractor constructing an on
reservation tribal school).
Kansas contends that the interest-balancing approach is
not suitably employed to assess its fuel tax for these reasons:
(1) The Kansas Legislature imposed the legal incidence of
2 The Court has also applied the interest-balancing approach to other
forms of state regulation relating to Indian tribal societies. See, e. g.,
California v. Cabazon Band of Mission Indians, 480 U. S. 202, 216–217
(1987) (State prohibited from regulating non-Indian customers of tribal
bingo operation); New Mexico v. Mescalero Apache Tribe, 462 U. S. 324,
333–343 (1983) (Mescalero II) (State barred from enforcing game laws
against non-Indians for on-reservation hunting and fishing).

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the tax on the distributor—here, a non-Indian enterprise—
not on retailers or their customers; and (2) the distributor’s
liability is triggered when it receives fuel from its supplier—
a transaction that occurs off reservation. Reply Brief 2–6.
Given these circumstances, Kansas urges and the Court ac
cepts, no balancing is in order. See ante, at 12–13; Brief for
Petitioner 6, 14–21. It is irrelevant in the State’s calculus
that its approach would effectively nullify the tribal fuel tax.
I note first that Kansas’ placement of the legal incidence
of the fuel tax is not as clear and certain as the State sug
gests and the Court holds. True, the statute states that
“the incidence of this tax is imposed on the distributor of the
first receipt of the motor fuel.” Kan. Stat. Ann. § 79–3408(c)
(2003 Cum. Supp.). But the statute declares initially that
the tax “is hereby imposed on the use, sale or delivery of all
motor vehicle fuels . . . used, sold or delivered in this state
for any purpose whatsoever,” § 79–3408(a), and it authorizes
distributors to pass on the tax to retailers, § 79–3409. No
tably, the statute excludes from taxation several “trans
actions,” including the “sale or delivery of motor-vehicle
fuel . . . for export from the state of Kansas to any other state
or territory or to any foreign country”; “sale or delivery . . .
to the United States”; “sale or delivery . . . to a contrac
tor for use in performing work for the United States”; and
“sale or delivery . . . to another duly licensed distributor.”
§ 79–3408(d). Kansas also excludes from taxation “lost or
destroyed” fuel, which is never sold by the distributor.
§ 79–3417 (1997). These provisions indicate not only that
the Kansas Legislature anticipated that distributors would
shift the tax burden further downstream. They reveal as
well where the Court’s analysis of the fuel tax goes awry.
When all the exclusions are netted out, the Kansas tax is
imposed not on all the distributor’s receipts, but effectively
only on fuel actually resold by the distributor to an in-state
nonexempt purchaser. To illustrate: Suppose in January a
distributor acquires 100,000 gallons of fuel and promptly sells

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80,000 to in-state nonexempt purchasers and 20,000 to ex
empt purchasers, for example, the United States or a U. S.
contractor. The distributor would compute its tax liability
by “deducting” the 20,000 gallons, see ante, at 108, n. 3, but
would remit tax only on the 80,000 gallons bought by in-state
nonexempt retailers.3 If the distributor elected to build in
ventory in January by holding an additional 10,000 gallons
for resale in February, Kansas would tax in January, but the
distributor would effectively offset in February the tax paid
in January on the inventory buildup. Again, in the end, only
fuel actually sold to in-state nonexempt buyers would be bur
dened by Kansas’ fuel tax.4
Kansas’ attribution of controlling effect to the formal legal
incidence of the tax rests in part on the State’s misreading
of Oklahoma Tax Comm’n v. Chickasaw Nation, 515 U. S.
450 (1995). See Brief for Petitioner 8, 16–20. The Court in
that case distinguished instances in which the legal incidence
of a State’s excise tax rests on a tribe or tribal members,
from instances in which the legal incidence rests on non-
Indians. When “the legal incidence . . . rests on a tribe or
on tribal members for sales made inside Indian country,” the
Court said, “the tax cannot be enforced absent clear congres
3 The Court analogizes the fuel excise tax “deduction” of exempt sales
to the federal income tax deduction for home mortgage interest. Ante,
at 109. The analogy is misconceived. An excise tax “deduction” bears
no realistic resemblance to a personal income tax deduction provided by
Congress for a nonbusiness personal expense. An excise tax “deduction,”
however, may fairly be compared to the standard income tax treatment of
merchandise returns. In any period, goods returned and held for resale
offset goods sold, so that only net sales yield gross profits for taxation
purposes. See 26 CFR § 1.446–1(a)(4)(i) (2005); cf. § 1.458–1(g) (adjust
ments under elective treatment of certain post-year-end returns of maga
zines, paperback books, and recordings).
4 If in February, the 10,000 gallons were destroyed and thus not sold,
Kansas would nonetheless offset the fuel tax burden as Kan. Stat. Ann.
§ 79–3417 (1997) provides, because these gallons would never be sold to
in-state nonexempt buyers.

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sional authorization.” 515 U. S., at 459. This “bright-line
standard,” id., at 460, is sensitive to the sovereign status
of Indian tribes, and reflects the Court’s recognition that
“tribal sovereignty is dependent on, and subordinate to, only
the Federal Government, not the States.” Colville, 447
U. S., at 154.5
When a State places the legal incidence of its tax on non-
Indians, however, no similarly overt disrespect for a tribe’s
independence and dignity is displayed. In cases of this
genre, Chickasaw Nation recognized, the Court has resisted
adoption of a categorical rule. In lieu of attributing disposi
tive significance to the legal incidence, the Court has focused
on the particular levy, and has evaluated the federal, state,
and tribal interests at stake. 515 U. S., at 459; see Cotton
Petroleum, 490 U. S., at 176 (Instead of a “mechanical or ab
solute” test, the Court has “applied a flexible pre-emption
analysis sensitive to the particular facts and legislation in
volved. Each case ‘requires a particularized examination of
the relevant state, federal, and tribal interests.’ ” (quoting
Ramah, 458 U. S., at 838)).
Chickasaw Nation did observe that “if a State is unable
to enforce a tax because the legal incidence of the impost
is on Indians or Indian tribes, the State generally is free
to amend its law to shift the tax’s legal incidence.” 515
U. S., at 460. Kansas took the cue. After our decision in
Chickasaw Nation, Kansas amended its fuel tax statute to
state that “the incidence of this tax is imposed on the distrib
utor.” Kan. Stat. Ann. § 79–3408(c) (2003 Cum. Supp.); see
1998 Kan. Sess. Laws, ch. 96, § 2, pp. 450–451; see also Kaul
5 The standard also accords with our repeated admonition that a State
may not “unlawfully infringe ‘on the right of reservation Indians to make
their own laws and be ruled by them.’ ” White Mountain Apache Tribe
v. Bracker, 448 U. S. 136, 142 (1980) (quoting Williams v. Lee, 358 U. S.
217, 220 (1959)). Accord Mescalero II, 462 U. S., at 332–333; McClanahan
v. Arizona Tax Comm’n, 411 U. S. 164, 171–172 (1973).

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122 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Ginsburg, J., dissenting
v. State Dept. of Revenue, 266 Kan. 464, 474, 970 P. 2d 60,
67 (1998).6
Kansas is mistaken, however, regarding the legal signifi
cance of this shift. Chickasaw Nation clarified only that a
State could shift the legal incidence to non-Indians so as to
avoid the categorical bar applicable when a state excise tax
is imposed directly on a tribe or tribal members for on
reservation activity. 515 U. S., at 460. At the same time,
Chickasaw Nation indicated that a shift in the legal inci
dence of the kind Kansas has legislated would trigger—not
foreclose—interest balancing. Ibid.7
Kansas and the Court heavily rely upon Mescalero Apache
Tribe v. Jones, 411 U. S. 145 (1973) (Mescalero I). That case
involved a ski resort operated by the Mescalero Apache
Tribe on off-reservation land leased from the Federal Gov
ernment. This Court upheld New Mexico’s imposition of a
tax on the gross receipts of the resort. Balancing was not in
order, the Court explained, because the Tribe had ventured
outside its own domain, and was fairly treated, for gross re
ceipts purposes, just as a non-Indian enterprise would be.
In such cases, the Court observed, an express-preemption
standard is appropriately applied. As the Court put it:
“Absent express federal law to the contrary, Indians going
6 As earlier observed, supra, at 119, Kansas retained the opening decla
ration that the tax “is hereby imposed on the use, sale or delivery of all
motor vehicle fuels . . . used, sold or delivered in this state for any purpose
whatsover.” Kan. Stat. Ann. § 79–3408(a) (2003 Cum. Supp.).
7 The only “bright-line standard” Chickasaw Nation advanced is the cat
egorical bar on tolls imposed directly on tribes or their members. 515
U. S., at 460. No doubt a tribal retailer may find an upstream state tax
on its suppliers less burdensome than a downstream tax on its consumers.
See ante, at 111, n. 5. But administrative ease is hardly the dispositive
consideration. The Court has never limited interest balancing to state
taxes imposed on the non-Indian consumers of tribal enterprises; it has
also applied this approach to state regulation of the non-Indian suppliers
of tribal enterprises. See, e. g., Department of Taxation and Finance of
N. Y. v. Milhelm Attea & Bros., 512 U. S. 61, 73–75 (1994).

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beyond reservation boundaries have generally been held
subject to nondiscriminatory state law otherwise applicable
to all citizens of the State.” Id., at 148–149. Accord Chick
asaw Nation, 515 U. S., at 462–465 (State permitted to tax
income of tribal members residing outside Indian country).
Cases of the Mescalero I kind, however, do not touch and
concern what is at issue in the instant case: taxes for
mally imposed on nonmembers that nonetheless burden on
reservation tribal activity.
Conceding that “we have never addressed th[e] precise
issue” this case poses, the Court asserts that “our Indian tax
immunity cases counsel against” application of the Bracker
interest-balancing test to Kansas’ fuel tax as it impacts on
the Nation Station. Ante, at 110. The Court so maintains
on the ground that the Kansas fuel tax is imposed on a non-
Indian and is unrelated to activity “on the reservation.”
Ante, at 110–113. As earlier explained, see supra, at 121,
one can demur to the assertion that the legal incidence of
the tax falls on the distributor, a nontribal entity. With re
spect to sales and deliveries to the Nation Station, however,
the nontribal entity can indeed be described as “engaged in
[an on-reservation] transaction with [a tribe].” Arizona
Dept. of Revenue v. Blaze Constr. Co., 526 U. S. 32, 37 (1999).
The reservation destination of fuel purchased by the Na
tion Station does not show the requisite engagement, in the
Court’s view, but I do not comprehend why. The destination
of the fuel counts not only under § 79–3408(a) (2003 Cum.
Supp.) (fuel tax “is hereby imposed on . . . all motor vehicle
fuels . . . used, sold or delivered in this state”).8 To whom
and where the distributor sells are the criteria that deter
mine the “transactions” on which “[n]o tax is . . . imposed,”
§ 79–3408(d), and, correspondingly, the transactions on which
8 Because § 79–3408(a) (2003 Cum. Supp.) does not aid the Court’s theory
that the State’s tax operates entirely off reservation, the Court essentially
reads the provision out of the statute, or treats it as harmless surplus.
See ante, at 107.

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124 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Ginsburg, J., dissenting
the tax is imposed. As earlier explained, see supra, at 119–
120, the tax is in reality imposed only on fuel actually resold
by the distributor to an in-state nonexempt purchaser.
Here, that purchaser is the Nation Station, plainly an on
reservation venture.9
Balancing tests have been criticized as rudderless, afford
ing insufficient guidance to decisionmakers. See Colville,
447 U. S., at 176 (Rehnquist, J., concurring in part, concur
ring in result in part, and dissenting in part) (criticizing the
“case-by-case litigation which has plagued this area of the
law”); Brief for Petitioner 30–32. Pointed as the criticism
may be, one must ask, as in life’s choices generally, what
is the alternative. “The principle of tribal self-government,
grounded in notions of inherent sovereignty and in congres
sional policies, seeks an accommodation between the inter
ests of the Tribes and the Federal Government, on the one
hand, and those of the State, on the other.” Colville, 447
U. S., at 156. No “bright-line” test is capable of achieving
such an accommodation with respect to state taxes formally
9 At the Court of Appeals level, the Nation presented no “starkly differ
ent interpretation of the statute.” Ante, at 105. This Court, in citing
Appellant’s Reply Brief in No. 03–3218 (CA10), p. 3, to the contrary, appar
ently failed to read on. At page 12, the Reply Brief states: “The fact that
the state tax is technically imposed off-reservation on a non-Indian is not
controlling. The state tax is directed at and burdens reservation value.”
Moreover, it is surely putting words in the Nation’s mouth to assert that
“[u]nder the Nation’s view . . . any off-reservation tax imposed on the manu
facture or sale of any good imported by the Nation or one of its members
would be subject to interest balancing.” Ante, at 114. The Nation itself
expressly “does not contend . . . that a non-discriminatory, off-reservation
state tax of general applicability may be precluded simply because the tax
has an adverse economic impact on a Tribe or its members.” Brief for
Respondent 1. As the Nation points out and the Court of Appeals com
prehended, “the actual issue presented here [is] the permissibility of a
state tax that effectively nullifies a Tribe’s power to impose a comparable
tax on fuel sold at market price by a tribally owned, on-reservation gas
station.” Ibid. (emphasis in original); see Prairie Band Potawatomi Na
tion v. Richards, 379 F. 3d 979, 986 (CA10 2004).

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imposed on non-Indians, but impacting on-reservation ven
tures. The one the Court adopts inevitably means, so long
as the State officially places the burden on the non-Indian
distributor in cases of this order, the Tribe loses. Faute
de mieux and absent congressional instruction otherwise,
I would adhere to precedent calling for “a particularized in
quiry into the nature of the state, federal, and tribal inter
ests at stake.” Bracker, 448 U. S., at 145.
II
I turn to the question whether the Court of Appeals cor
rectly balanced the competing interests in this case. Kansas
and the Nation both assert a substantial interest in using
their respective fuel taxes to raise revenue for road mainte
nance. Weighing competing state and tribal interests in
raising revenue for public works, Colville observed:
“While the Tribes do have an interest in raising reve
nues for essential governmental programs, that interest
is strongest when the revenues are derived from value
generated on the reservation by activities involving the
Tribes and when the taxpayer is the recipient of tribal
services. The State also has a legitimate governmental
interest in raising revenues, and that interest is likewise
strongest when the tax is directed at off-reservation
value and when the taxpayer is the recipient of state
services.” 447 U. S., at 156–157.
In Colville, it was “painfully apparent” that outsiders had no
reason to travel to Indian reservations to buy cigarettes
other than the bargain prices tribal smokeshops charged by
virtue of their claimed exemption from state taxation. Id.,
at 154–155. The Court upheld the State of Washington’s
taxes on cigarette purchases by nonmembers at tribal
smokeshops. No “principl[e] of federal Indian law,” the
Court said, “authorize[s] Indian tribes . . . to market an ex
emption from state taxation to persons who would normally
do their business elewhere.” Id., at 155.

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126 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
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This case, as the Court of Appeals recognized, bears scant
resemblance to Colville. “[I]n stark contrast to the smoke
shops in Colville,” the Nation here is not using its asserted
exemption from state taxation to lure non-Indians onto its
reservation. 379 F. 3d, at 985. The Nation Station is not
visible from the state highway, and it advertises no exemp
tion from the State’s fuel tax. Including the Nation’s tax,
the Nation Station sells fuel “ ‘within 2¢ per gallon of the
price prevailing in the local market.’ ” Id., at 982 (quoting
the Nation’s expert’s report); see also App. 36–40.10 The
Nation Station’s draw, therefore, is neither price nor prox
imity to the highway; rather, the Nation Station operates
almost exclusively as an amenity for people driving to and
from the casino.
The Tenth Circuit regarded as valuable to its assessment
the opinion of the Nation’s expert, which concluded: “ ‘[T]he
Tribal and State taxes are mutually exclusive and only one
can be collected without reducing the [Nation Station’s] fuel
business to virtually zero.’ ” 379 F. 3d, at 986. Kansas
“submitted [no] contradictory evidence” and did not argue
that the expert opinion offered by the Nation was “either
incorrect or exaggerated.” Ibid.11 In this respect, the case
10 Tribes, it should be plain, cannot prevail in the interest-balancing anal
ysis simply because they tax the same product or activity that the State
seeks to tax. See Washington v. Confederated Tribes of Colville Reser
vation, 447 U. S. 134, 156 (1980). Otherwise, “the Tribes could impose a
nominal tax and open chains of discount stores at reservation borders,
selling goods of all descriptions at deep discounts and drawing custom
from surrounding areas.” Id., at 155; see infra, at 130.
11 At oral argument, it was suggested that the Nation Station might pass
on both taxes to its customers if it were willing to forgo some of its profits.
Tr. of Oral Arg. 3–6, 25–27, 48–50. This speculation apparently did not
take account of the opinion and explanation of the Nation’s expert, which
stands uncontradicted in the record developed in the lower courts. More
over, the Nation’s counsel informed the Court: “[T]he [T]ribe is being
forced right now to subsidize the sales at the [Nation S]tation at a loss,
which it’s doing for the balance of this litigation.” Id., at 25; cf. ante,
at 114–115.

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Ginsburg, J., dissenting
is indeed novel. It is the first case in which a Tribe demon
strated below that the imposition of a state tax would pre
vent the Tribe from imposing its own tax. Cf. Cotton Petro
leum, 490 U. S., at 185 (state and tribal taxes were not
mutually exclusive because “the Tribe could, in fact, increase
its taxes without adversely affecting on-reservation oil and
gas development”).
The Court of Appeals considered instructive this Court’s
decision in California v. Cabazon Band of Mission Indians,
480 U. S. 202 (1987). See 379 F. 3d, at 985. The Court there
held that tribal and federal interests outweighed state inter
ests in regulating tribe-operated facilities for bingo and
other games. Cabazon, 480 U. S., at 219–220. Distinguish
ing Colville, the Court pointed out that the Tribes in Caba
zon “[were] not merely importing a product onto the reserva
tio[n] for immediate resale to non-Indians”; they had “built
modern facilities” and provided “ancillary services” so that
customers would come in increasing numbers and “spend ex
tended periods of time” playing their “well-run games.” 480
U. S., at 219; see also New Mexico v. Mescalero Apache
Tribe, 462 U. S. 324, 327, 341 (1983) (Mescalero II) (State
barred from regulating hunting and fishing on-reservation
where the Tribe had constructed a “resort complex” and de
veloped wildlife and land resources).
As in Cabazon, so here, the Nation Station is not “merely
importing a product onto the reservatio[n] for immediate re
sale to non-Indians” at a stand-alone retail outlet. 480 U. S.,
at 219. Fuel sales at the Nation Station are “an integral
and essential part of the [Tribe’s] on-reservation gaming en
terprise.” 379 F. 3d, at 984. The Nation built the Nation
Station as a convenience for its casino patrons and, but for
the casino, there would be no market for fuel in this other
wise remote area. Id., at 982.
The Court of Appeals further emphasized that the
Nation’s “interests here are strengthened because of its need
to raise fuel revenues to construct and maintain reservation

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128 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
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roads, bridges, and related infrastructure without state as
sistance.” Id., at 985. The Nation’s fuel revenue comes
exclusively from the Nation Station, and that revenue (ap
proximately $300,000 annually) may be used only for “ ‘con
structing and maintaining roads, bridges and rights-of-way
located on or near the reservation.’ ” Id., at 985–986 (quot
ing Prairie Band Potawatomi Law and Order Code § 10–6–7
(2003)).
The Nation’s interests coincide with “strong federal inter
ests in promoting tribal economic development, tribal self
sufficiency, and strong tribal governments.” 379 F. 3d, at
986. The United States points to the poor condition of In
dian reservation roads, documented in federal reports, condi
tions that affect not only driving safety, but also the ability
to furnish emergency medical, fire, and police services on
an expedited basis, transportation to schools and jobs, and
the advancement of economic activity critical to tribal self
sufficiency. Brief for United States as Amicus Curiae 26;
see, e. g., Dept. of Interior, Bureau of Indian Affairs, TEA–21
Reauthorization Resource Paper: Transportation Serving
Native American Lands (May 2003). The shared interest of
the Federal Government and the Nation in improving reser
vation roads is reflected in Department of the Interior regu
lations implementing the Indian Reservation Roads Pro
gram. See 69 Fed. Reg. 43090 (2004); 25 CFR § 170 et seq.
(2005). The regulations aim at enhancing the ability of
tribal governments to promote road construction and main
tenance. They anticipate that tribes will supplement fed
eral funds with their own revenues, including funds gained
from a “[t]ribal fuel tax.” § 170.932(d). Because the Na
tion’s roads are integrally related to its casino enterprise,
they also further federal interests in tribal economic devel
opment advanced by the Indian Gaming Regulatory Act, 102
Stat. 2467, 25 U. S. C. § 2701 et seq.
Against these strong tribal and federal interests, Kansas
asserts only its “general interest in raising revenues.” 379

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F. 3d, at 986. “Kansas’ interest,” as the Court of Appeals
observed, “is not at its strongest.” Id., at 987. By effec
tively taxing the Nation Station, Kansas would be deriving
revenue “primarily from value generated on the reservation”
by the Nation’s casino. Ibid. Moreover, the revenue Kan
sas would gain from applying its tax to fuel destined for the
Nation Station appears insubstantial when compared with
the total revenue ($6.1 billion in 2004) the State annually
collects through the tax. See id., at 982; Brief for Respond
ent 12 (observing that “[t]he tax revenues at issue—roughly
$300,000 annually—are less than one-tenth of one percent of
the total state fuel tax revenues”).
The Court asserts that “Kansas uses the proceeds from its
fuel tax to pay for a significant portion of the costs of main
taining the roads and bridges on the Nation’s reservation.”
Ante, at 115. The record reveals a different reality. Ac
cording to the affidavit of the Director of the Nation’s Road
and Bridge Department, Kansas and its subdivisions have
failed to provide proper maintenance even on their own roads
running through the reservation. App. 79. As a result, the
Nation has had to assume responsibility for a steadily grow
ing number of road miles within the reservation (roughly
118 of the 212 total miles in 2000). Ibid.; see also Brief for
Respondent 3, 40, 44–45. Of greater significance, Kansas
expends none of its fuel tax revenue on the upkeep or im
provement of tribally owned reservation roads. 379 F. 3d,
at 986–987; cf. Ramah, 458 U. S., at 843, n. 7 (“This case
would be different if the State were actively seeking tax
revenues for the purpose of constructing, or assisting in the
effort to provide, adequate [tribal services].”). In contrast,
Kansas sets aside a significant percentage of its fuel tax rev
enues (over 40% in 1999) for counties and localities. Kan.
Stat. Ann. § 79–3425 (2003 Cum. Supp.); see also § 79–34,142
(1997) (prescribing allocation formula); 1999 Kan. Sess.
Laws, ch. 137, § 37, p. 1124. And, as indicated earlier, supra,
at 118–120, Kansas accords the Nation no dispensation based

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130 WAGNON v. PRAIRIE BAND POTAWATOMI NATION
Ginsburg, J., dissenting
on the Nation’s sovereign status. The Nation thus receives
neither a state exemption so that it can impose its own fuel
tax, nor a share of the State’s fuel tax revenues. Accord
ingly, the net result of invalidating Kansas’ tax as applied to
fuel distributed to the Nation Station would be a somewhat
more equitable distribution of road maintenance revenues
in Kansas.
Kansas argues that, were the Nation to prevail in this
case, nothing would stop the Nation from reducing its tax in
order to sell gas below the market price. Brief for Peti
tioner 30. Colville should quell the State’s fears in this re
gard. Were the Nation to pursue such a course, it would
be marketing an exemption, much as the smokeshops did in
Colville, and hence, interest balancing would likely yield a
judgment for the State. See 447 U. S., at 155–157. In any
event, as the Nation points out, the State could guard against
the risk that “Tribes will impose a ‘nominal tax’ and sell
goods at a deep discount on the reservation.” Brief for Re
spondent 34–35. The State could provide a credit for any
tribal tax imposed or enact a state tax that applies only to
the extent that the Nation fails to impose an equivalent
tribal tax. Id., at 35.
Today’s decision is particularly troubling because of the
cloud it casts over the most beneficial means to resolve con
flicts of this order. In Oklahoma Tax Comm’n v. Citizen
Band Potawatomi Tribe of Okla., 498 U. S. 505 (1991), the
Court counseled that States and tribes may enter into agree
ments establishing “a mutually satisfactory regime for the
collection of this sort of tax.” Id., at 514; see also Nevada
v. Hicks, 533 U. S. 353, 393 (2001) (O’Connor, J., concurring
in part and concurring in judgment) (describing various
state-tribal agreements); Brief for United States as Amicus
Curiae 28–29, and n. 12; Brief for National Intertribal Tax
Alliance et al. as Amici Curiae; Ansson, State Taxation of
Non-Indians Who Do Business With Indian Tribes: Why Sev
eral Recent Ninth Circuit Holdings Reemphasize the Need

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for Indian Tribes to Enter Into Taxation Compacts With
Their Respective States, 78 Ore. L. Rev. 501, 546 (1999)
(“More than 200 Tribes in eighteen states have resolved their
taxation disputes by entering into intergovernmental agree
ments.”).12 By truncating the balancing-of-interests ap
proach, the Court has diminished prospects for cooperative
efforts to achieve resolution of taxation issues through con
structive intergovernmental agreements.
In sum, the Nation operates the Nation Station in order
to provide a service for patrons at its casino without, in any
way, seeking to attract bargain hunters on the lookout for
cheap gas. Kansas’ collection of its tax on fuel destined for
the Nation Station will effectively nullify the Nation’s tax,
which funds critical reservation road-building programs, en
deavors not aided by state funds. I resist that unbalanced
judgment.
* * *
For the reasons stated, I would affirm the judgment of the
Court of Appeals for the Tenth Circuit.
12 In 1992, Kansas and the Nation negotiated an intergovernmental tax
compact. App. 20–26. When the initial five-year term expired, the State
declined to renew the agreement. Brief for United States as Amicus
Curiae 3–4.