United States v. Vaello Madero
596 U. S. ____ (2022) (2022)
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Rule of Law:
Under the Territory Clause, Congress may treat residents of U.S. territories differently from residents of the states in federal tax and benefits programs, so long as there is a rational basis for the distinction. The fact that residents of a territory are exempt from most federal taxes provides a rational basis for excluding them from a federal benefits program.
Facts:
- Jose Luis Vaello Madero, a U.S. citizen, began receiving Supplemental Security Income (SSI) benefits while he was a resident of New York.
- In 2013, Vaello Madero moved from New York to Puerto Rico.
- Under the governing statute, residents of Puerto Rico are not eligible for SSI benefits, which are available only to residents of the 50 States, the District of Columbia, and the Northern Mariana Islands.
- Unaware of Vaello Madero's move, the U.S. Government continued to pay him SSI benefits for several years after he became a resident of Puerto Rico.
- The total overpayment of benefits to Vaello Madero amounted to more than $28,000.
- Unlike residents of the 50 states, residents of Puerto Rico are typically exempt from most federal income, gift, estate, and excise taxes.
- Instead of SSI, residents of Puerto Rico are eligible for Aid to the Aged, Blind, and Disabled (AABD), a separate benefits program funded jointly by the federal government and Puerto Rico.
Procedural Posture:
- The United States Government sued Jose Luis Vaello Madero in the U.S. District Court for the District of Puerto Rico, a federal trial court, to recover overpaid SSI benefits.
- Vaello Madero asserted as an affirmative defense that excluding residents of Puerto Rico from the SSI program violated the equal protection guarantee of the Fifth Amendment.
- The District Court granted summary judgment for Vaello Madero, holding that the exclusion was unconstitutional.
- The U.S. Government, as appellant, appealed to the U.S. Court of Appeals for the First Circuit, a federal intermediate appellate court.
- The Court of Appeals affirmed the District Court's judgment, finding no rational basis for excluding U.S. citizens in Puerto Rico from the SSI program.
- The U.S. Government, as petitioner, successfully petitioned the Supreme Court of the United States for a writ of certiorari to review the Court of Appeals' decision.
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Issue:
Does Congress's exclusion of residents of Puerto Rico from the Supplemental Security Income (SSI) program violate the equal-protection component of the Fifth Amendment's Due Process Clause?
Opinions:
Majority - Kavanaugh, J.
No, Congress's exclusion of residents of Puerto Rico from the SSI program does not violate the equal-protection component of the Fifth Amendment because there is a rational basis for the differential treatment. The Court's precedents in Califano v. Torres and Harris v. Rosario dictate the outcome. Those cases established that under the deferential rational-basis test, Congress may treat Puerto Rico differently from the states so long as there is a rational basis for its action. Puerto Rico’s unique tax status—specifically, that its residents are typically exempt from most federal income, gift, estate, and excise taxes—provides a rational basis for Congress to also treat its residents differently with respect to benefits programs. Congress is not required to conduct a dollar-to-dollar comparison of tax burdens and benefits; it is reasonable for Congress to take account of the general balance. Forcing Congress to extend SSI to Puerto Rico could also lead residents of the states to insist on imposing federal taxes on Puerto Rico residents, which would inflict significant financial burdens on the Puerto Rican economy.
Concurring - Thomas, J.
Yes, I join the Court's opinion, but I write separately to express doubt about the doctrine of 'reverse incorporation,' which holds that the Fifth Amendment's Due Process Clause contains an equal protection component identical to the Fourteenth Amendment's. This doctrine lacks a firm basis in the Constitution's original meaning. A more textually and historically sound basis for prohibiting the Federal Government from engaging in certain forms of discrimination may be found in the Fourteenth Amendment's Citizenship Clause, which implies a guarantee of equal civil rights for all citizens against both federal and state governments.
Concurring - Gorsuch, J.
Yes, I join the Court's opinion because the parties did not ask the Court to overrule the Insular Cases. However, those cases, which created the doctrine of 'unincorporated territories' and form the foundation for treating Puerto Rico differently, are a shameful error with no basis in the Constitution. They were premised on ugly racial stereotypes and the idea of American colonialism. The Insular Cases rest on a rotten foundation, deserve no place in our law, and the Court should squarely overrule them in an appropriate future case.
Dissenting - Sotomayor, J.
Yes, Congress's exclusion of residents of Puerto Rico from the SSI program violates the equal-protection component of the Fifth Amendment's Due Process Clause because there is no rational basis for the distinction. The government's justification—that Puerto Rico residents do not pay most federal taxes—is irrational as applied to the SSI program. By definition, SSI is a means-tested program for individuals with such low income that they would pay little to no federal income tax regardless of where they reside. It is antithetical to the program's purpose to exclude needy citizens who can scarcely afford to pay taxes on the grounds that they do not pay enough taxes. The classification is arbitrary and serves no legitimate government interest, especially given the dire poverty affecting many U.S. citizens in Puerto Rico.
Analysis:
This decision reaffirms Congress's broad authority under the Territory Clause to legislate differently for U.S. territories compared to the states, upholding the highly deferential rational-basis standard for such distinctions in tax and benefits programs. It solidifies the specific precedent that a territory's unique tax status provides a sufficient rational basis for differential treatment in benefits. However, the powerful concurrences by Justices Thomas and Gorsuch signal a growing judicial desire to fundamentally reconsider and potentially overturn the foundational legal doctrines—the Insular Cases and reverse incorporation—that govern the relationship between the U.S. and its territories, suggesting this area of law may be ripe for significant change.
