The U.S. Supreme Court on Thursday, April 21, 2022, upheld a 1972 federal law that denies disability benefits to residents of Puerto Rico. By an 8-1 ruling, the court said Congress can deny Supplemental Security Income (SSI) benefits to residents of Puerto Rico (even though they are U.S. citizens) because they don’t pay all federal taxes. The ruling was also indirectly tied to a series of Supreme court opinions in 1901 known as the Insular Cases that held, among other things, that citizens of certain American-held territories were not entitled to all rights of citizenship. The lone dissent came from Justice Sonia Sotomayor, whose parents were born in Puerto Rico.

In its deliberations, the court concluded that the Fifth Amendment to the U.S. Constitution did not require Congress to extend SSI benefits to Puerto Rico, a change that a lower appeals court had ruled in favor of in 2021. The U.S. Justice Department, under former President Donald Trump, originally appealed the lower court’s opinion. The Biden administration continued that appeal while urging Congress to officially extend SSI benefits to Puerto Rico.

United States v. Vaello Madero

In 2013, when New York resident Jose Luis Vaello Madero, who was receiving SSI benefits, moved to Puerto Rico. Vaello Madero continued to receive SSI payments totaling more than $28,000 over several years. The U.S. government sued Vaello Madero, but a federal district court and a federal appeals court sided with him. The current case represents an appeal of the lower court ruling.

The question before the court pits two parts of the U.S. Constitution against each other—the Territory Clause which states that Congress may “make all needful Rules and Regulations respecting the Territory . . . belonging to the United States,” and the equal-protection component of the Fifth Amendment’s Due Process Clause.

The syllabus to the opinion document states, “Congress has long maintained different federal tax and benefits programs for residents of the Territories than for residents of the 50 States. For example, residents of Puerto Rico are typically exempt from most federal income, gift, estate, and excise taxes.” This policy has been used to support the withholding of some federal benefit programs, including SSI, from Puerto Rico and some other territories.

Puerto Rico and Aid to the Aged, Blind, and Disabled

Puerto Rico became a U.S. territory after the Spanish-American War of 1898. Residents are U.S. citizens but have no vote for president or representation in Congress. They also do not pay most federal income taxes.

SSI benefits offer regular financial assistance for blind and disabled adults, children, and elderly people in need. The program is available to people living in the 50 U.S. states, but not to those living in Puerto Rico, the Virgin Islands, and Guam. Instead of transferring to SSI, Puerto Ricans remain on its existing Aid to the Aged, Blind, and Disabled (AABD) program, which provides similar benefits but at a fraction of those provided by SSI.

AABD versus SSI

Puerto Rico’s AABD program was established by the Public Welfare Amendments of 1962 and is administered by the Administración de Desarollo Socioeconómico de la Familia (ADSEF). The federal government funds 75% of the program’s benefit cost and 50% of administrative costs.

SSI is an entitlement program meaning anyone who meets the eligibility criteria is entitled to draw SSI benefits. AABD beneficiaries are limited by the program’s annual funding is which capped by federal law for Puerto Rico and other territories and programs that receive federal funds. Puerto Rico’s cap is roughly $36 million for adult assistance, foster care, adoption assistance, and AABD. In 2011 the Government Accountability Office (GAO) estimated that federal spending on AABD was less than 2% of what it would be under SSI.

The Supreme Court Decision

In the majority opinion, Justice Brett Kavanaugh wrote that “Congress has long maintained federal tax and benefits programs for residents of Puerto Rico and the other Territories that differ in some respects from the federal tax and benefits programs for residents of the 50 States.”

Noting that residents of Puerto Rico are exempt from most federal income, estate, and excise taxes, Kavanaugh said they are eligible for the benefits and programs funded by taxes they do pay. “But just as not every federal tax extends to residents of Puerto Rico, so too not every federal benefits program extends to residents of Puerto Rico.”

The majority opinion concludes that “if the court were to require identical treatment on the benefits side, residents of the States could presumably insist that federal taxes be imposed on residents of Puerto Rico and other Territories in the same way that those taxes are imposed on residents of the States.” This, the opinion suggests would “inflict significant new financial burdens on residents of Puerto Rico, with serious implications for the Puerto Rican people and the Puerto Rican economy.”

The Dissent

In her dissent, Justice Sotomayor wrote, “In my view, there is no rational basis for Congress to treat needy citizens living anywhere in the United States so differently from others.” Noting that, “By definition, SSI recipients pay few if any taxes at all, ” Sotomayor argues that using non-payment of taxes as a means to excluding a population could result in the exclusion of “needy residents of Vermont, Wyoming, South Dakota, North Dakota, Montana, and Alaska from benefits programs on the basis that residents of those States pay less into the Federal Treasury than residents of other states.”

Sotomayor concludes her by stating, “The Constitution permits Congress to “make all needful Rules and Regulations” respecting the Territories. That constitutional command does not permit Congress to ignore the equally weighty constitutional command that it treat United States citizens equally. I respectfully dissent.”