In the case of Ramah Navajo School Board, Inc. v. Bureau of Revenue of New Mexico (1981), the U.S Supreme Court ruled in favor of the Ramah Navajo School Board, stating that a state could not impose taxes on a federal contractor operating within an Indian reservation without express authorization from Congress. The school board had contracted with non-Indian construction companies to build schools on tribal land and was subsequently taxed by New Mexico's Bureau of Revenue for gross receipts tax related to these contracts. The court held that this taxation interfered with federal policy towards Native American tribes and their sovereignty rights over their reservations as established by treaties and statutes.

In the dissenting opinion for Ramah Navajo School Board, Inc. v. Bureau of Revenue of New Mexico, Justice White disagreed with the majority's interpretation that federal law preempts state taxation on a non-Indian contractor’s gross receipts from construction projects on Indian reservations. He argued that there was no explicit congressional intent to preempt such state taxes and pointed out that Congress had not provided any alternative source of revenue for states in lieu of these taxes. Furthermore, he contended that this decision would unfairly burden states by depriving them of tax revenues without clear justification or compensation while benefiting private contractors who could now operate tax-free in Indian territories.