In the United States v. Rickert case of 1902, the Supreme Court ruled that Native American reservations are federal property and therefore not subject to state taxation. The case arose when Frederick Rickert refused to pay taxes on his store located within a reservation in South Dakota, arguing that it was exempt from state taxation as it was on tribal land. However, the court held that while tribes have certain rights to self-governance, they do not possess full sovereignty over their lands because those lands were "ceded" by treaty and held "in trust" for them by the U.S government. Therefore, these lands could be taxed under federal law but remained immune from state tax laws unless Congress explicitly authorized such taxation.

In the dissenting opinion for United States v. Rickert, Justice Harlan argued that the majority's decision was inconsistent with previous rulings and infringed upon tribal sovereignty. He contended that Indian tribes should be considered "distinct political communities" with inherent rights to manage their own affairs, including taxation of non-tribal members living on reservation land. Harlan believed that Congress did not have unlimited power over Native American lands and could not simply override tribal decisions without clear legislative intent or constitutional authority. The justice further asserted that federal laws granting certain privileges to non-Indians on reservations did not automatically exempt them from local taxes imposed by the tribe itself. In his view, such an interpretation would undermine tribal self-governance and contradict established principles of federal Indian law.