The U.S. Supreme Court case Washington et al. v. Confederated Tribes of the Colville Indian Reservation et al., 1979, dealt with issues surrounding taxation and tribal sovereignty on Native American reservations in the state of Washington. The State of Washington attempted to impose a tax on non-tribal members who purchased cigarettes from businesses located within reservation boundaries owned by tribal members, arguing that it was not infringing upon tribal self-governance as these were off-reservation activities involving non-members. However, the tribes contended this violated their sovereign rights to govern economic activity within their territories without interference from state law. The court ruled in favor of the State of Washington stating that while tribes do have inherent powers for self-government including internal affairs and control over their own membership, they cannot prevent states from imposing taxes on sales made by tribe-owned enterprises to nonmembers even if those sales occur on a reservation because such transactions involve significant state interests beyond just revenue collection like public health and safety concerns related to cigarette smoking.

In the dissenting opinion for Washington et al. v. Confederated Tribes of the Colville Indian Reservation et al., Justice William Rehnquist, joined by Chief Justice Warren Burger and Justice Potter Stewart, argued that the majority's decision to allow tribal taxation on non-Indian businesses operating within reservation boundaries was a departure from established precedent. They contended that such power should not be inferred merely from retained sovereignty but must be expressly granted by Congress or necessarily implied from a tribe’s treaty rights. The dissenters also expressed concern over potential double taxation issues arising when both state and tribal authorities impose taxes on these entities, which they believed could discourage commercial activity on reservations and harm economic development efforts there.