In the 1947 case of West v. Oklahoma Tax Commission, the United States Supreme Court ruled in favor of the state tax commission. The issue at hand was whether or not an inheritance tax could be levied by a U.S. state on property located within Indian reservations and owned by tribal members who had passed away. The court held that such taxation did not infringe upon federal jurisdiction over Native American affairs nor violate any existing treaties between tribes and the federal government. The decision was based on two main points: first, that Congress had given states permission to impose such taxes through legislation; second, that there were no specific treaty provisions prohibiting this type of taxation for these particular tribes (the Osage Nation). Therefore, it concluded that Oklahoma's imposition of an inheritance tax on reservation land did not interfere with tribal self-government or sovereignty. This ruling effectively allowed states to collect taxes from Native Americans living within their borders under certain circumstances - a significant shift in policy regarding indigenous rights and state authority.

In the dissenting opinion for West v. Oklahoma Tax Commission, Justice Frank Murphy argued that the state of Oklahoma did not have jurisdiction to tax income derived from restricted Indian lands. He contended that such taxation was a violation of federal law and treaties with Native American tribes which explicitly exempted them from state taxes. He further stated that this case represented an encroachment on tribal sovereignty by allowing states to impose their laws on federally protected Indian territories. Justice Murphy expressed concern about the potential implications of this decision, warning it could lead to further erosion of tribal rights and protections under federal law if states were allowed unchecked authority over these areas without clear congressional approval or constitutional mandate.