Tax Break: Removing Welfare From Income Tax For Tribal Groups (H.R. 3043)

What is H.R. 3043?

(Updated December 2, 2017)

This bill was enacted on September 26, 2014

This bill would amend the Internal Revenue Code to allow "members of Indian tribes" to exclude the amount of welfare they receive from their gross income when calculating income tax.

In this context, welfare refers to “Indian general welfare benefit,” which is any payment or service delivered to a Native American through a tribal government program. The tax benefit of this bill applies to any Indian welfare program, as long as benefits are available to any tribal member, are dispersed without discrimination or favoritism, and don’t go toward lavish expenses.

If enacted, this bill would order the Secretary of the Treasury to create a Tribal Advisory Committee to collaborate with the Treasury on tax matters regarding Native Americans. It would also create training and education for IRS field agents on federal Indian law and how to implement elements of this bill. Lastly, it would cancel audits of Indian tribal governments and individual members and dismiss any tax penalties incurred by individuals who have already excluded welfare benefits from their gross income.

Argument in favor

This bill would promote self-reliance among tribal groups by removing taxes that keep them dependent on federal welfare — without costing taxpayers money.

Argument opposed

Tribal groups are already exempted from federal taxes on social benefit programs — more tax breaks will give welfare recipients an incentive to rely on federal funds.

Impact

Cost of H.R. 3043

A CBO cost estimate is not available at this time.

Additional Info

In Depth:

H.R. 3043 has attracted strong support from various Native American tribal groups across the country. Proponents of the bill argue that it will end unfair taxation on essential tribal government programs like housing, child care, education, etc. It would also create exemptions for vital cultural services. According to Indianz.com, medicine men would not need to report cash payments for their services to the IRS because they’re promoting the general welfare of their community. In addition to economic benefits, Native American leaders hope that this bill will grant a greater measure of independence to inhabitants on Indian Reservations.

Media:

U.S. Treasury Department Press Release

The Hill

Indianz

(Photo Credit: Flickr user Donovan Shortey)