In United States v. Vaello Madero, decided April 21, 2022, the Supreme Court ruled 8-1 that Congress does not violate the Constitution when it excludes residents of Puerto Rico from the Supplemental Security Income program. Justice Brett Kavanaugh wrote the majority opinion, holding that Puerto Rico’s distinct federal tax status gives Congress a rational basis for treating the territory differently from the states in a benefit program funded out of the general treasury. Justice Sonia Sotomayor was the lone dissenter.
How the Case Reached the Supreme Court
Jose Luis Vaello Madero was born in Puerto Rico in 1954 and moved to New York in 1985. After serious health problems, he began receiving SSI in 2012.1Oyez. United States v Vaello-Madero A year later he moved back to Puerto Rico to help care for his wife. His SSI deposits kept arriving because the Social Security Administration did not learn about the relocation for years.
In 2016 the SSA discovered the move, ended his benefits, and sued in the District of Puerto Rico to recover roughly $28,081 in payments it classified as overpayments.1Oyez. United States v Vaello-Madero His attorneys turned the collection action into a constitutional challenge, arguing that cutting him off from SSI solely because he now lived in Puerto Rico violated the Fifth Amendment.
The district court agreed. The First Circuit affirmed in April 2020, applying the deferential rational-basis test and still finding the exclusion unconstitutional. The appeals court noted that the IRS collected roughly $3.4 billion from Puerto Rico taxpayers in 2018, and that anyone poor enough to qualify for SSI would not owe federal income tax in any state either.2Justia Law. United States v Vaello-Madero, No 19-1390 (1st Cir 2020) The government petitioned the Supreme Court.
The Constitutional Question
SSI is a means-tested federal program that pays monthly cash benefits to people who are 65 or older, blind, or disabled, and who have very limited income and resources.3Social Security Administration. Understanding Supplemental Security Income – SSI Eligibility Requirements It is paid out of general federal revenues. Residents of the 50 states, the District of Columbia, and the Northern Mariana Islands can receive it. Residents of Puerto Rico, Guam, the U.S. Virgin Islands, and American Samoa cannot.
Vaello Madero argued that this line violates the equal-protection component of the Fifth Amendment’s Due Process Clause: a U.S. citizen does not become less aged, less disabled, or less poor by moving from a state to a territory, so tying eligibility to geography is arbitrary. The government invoked the Territorial Clause in Article IV, which grants Congress broad authority over U.S. territories, and pointed to Puerto Rico’s tax status. Most residents whose income comes only from Puerto Rican sources do not pay federal income tax.4Internal Revenue Service. Tax Topic 901 – Is a Person With Income From Sources Within Puerto Rico Required to File a US Federal Income Tax Return That, the government said, was reason enough to treat the territory differently.
The Majority Opinion
Justice Kavanaugh’s majority opinion held that the two earlier cases addressing federal benefit programs in Puerto Rico, Califano v. Torres (1978) and Harris v. Rosario (1980), “dictate the result here.”5Supreme Court of the United States. United States v Vaello Madero Both had upheld differential treatment of Puerto Rico under the rational-basis standard. The Court applied that same deferential standard here.
The reasoning is essentially a fiscal trade-off. Residents of Puerto Rico with only local-source income are exempt from federal personal income tax, federal estate tax, and federal gift tax. SSI is funded by the general treasury those taxes support. Congress could rationally decide, the majority said, to link exclusion from certain federal benefits to that exemption. The Court did not reach the broader question of how much authority the Territorial Clause gives Congress over the constitutional rights of territorial residents; rational basis was enough to decide the case.
The Gap in the Tax-Status Rationale
The majority opinion focuses narrowly on income, estate, and gift taxes. Puerto Rico residents do pay other federal taxes. Employers and employees on the island pay the same 6.2% Social Security tax and 1.45% Medicare tax as workers in the 50 states.6Internal Revenue Service. Topic No 903, US Employment Tax in Puerto Rico They also pay federal excise and self-employment taxes.
There is a second problem with the reasoning. SSI is means-tested. Anyone whose income is low enough to qualify would owe little or no federal income tax wherever they lived. The First Circuit had already flagged this point; the Supreme Court’s majority did not resolve it.
Justice Sotomayor’s Dissent
Sotomayor made three main arguments. First, she called the tax-status justification “antithetical to the entire premise of the program,” because SSI recipients by definition are too poor to pay federal income tax regardless of where they live.5Supreme Court of the United States. United States v Vaello Madero
Second, she argued that the majority’s logic has no stopping point. If Congress can exclude citizens from safety-net programs because they live in a jurisdiction that contributes less to the federal treasury, nothing in principle would prevent Congress from doing the same to residents of low-tax states.
Third, she raised what she called a “political powerlessness” concern. Residents of the states can vote for members of Congress who might change federal benefit rules. Puerto Rico has no voting representation in Congress, so residents there cannot fix the disparity politically. That, she wrote, is exactly the situation in which courts should look harder at legislative classifications rather than defer to them.
Sotomayor also argued that Califano v. Torres and Harris v. Rosario should not carry the precedential weight the majority gave them. Both were summary dispositions issued without full briefing or oral argument, and neither addressed the specific equal-protection claim before the Court in Vaello Madero.
The Concurring Opinions Signal Where the Doctrine Could Move
Justice Thomas on the Fifth Amendment
Justice Thomas joined the result but wrote separately to question a premise everyone else accepted: that the Fifth Amendment’s Due Process Clause contains an equal-protection guarantee at all. He traced that idea to Bolling v. Sharpe (1954) and argued the clause, by its text, guarantees only “process.” As an alternative textual basis for prohibiting federal discrimination in matters of civil rights, Thomas pointed to the Fourteenth Amendment’s Citizenship Clause. The suggestion did not change the outcome, but it signaled his willingness to reopen a foundational doctrine.
Justice Gorsuch on the Insular Cases
Justice Gorsuch used his concurrence to attack the Insular Cases, a series of decisions from 1901 to 1922 that built the legal framework for how the Constitution applies in U.S. territories. The most prominent, Downes v. Bidwell (1901), held that Puerto Rico was not part of the “United States” for purposes of the constitutional requirement that duties and taxes be uniform.7Justia US Supreme Court. Downes v Bidwell, 182 US 244 (1901) Those cases created the distinction between “incorporated” territories, where the full Constitution applies, and “unincorporated” territories, where only “fundamental” rights do.
Gorsuch called the Insular Cases a product of “burgeoning colonial ambitions” after the Spanish-American War, said they rested on “ugly racial stereotypes” and “the theories of social Darwinists,” and wrote that they “have no foundation in the Constitution” and “deserve no place in our law.”5Supreme Court of the United States. United States v Vaello Madero He acknowledged the current case did not require overruling them, but said he hoped the Court would “squarely overrule them” in an appropriate future case.
What Puerto Rico Residents Receive Instead
Puerto Rico operates its own program, Aid to the Aged, Blind, and Disabled, funded jointly by the federal government and the territory. AABD serves roughly the same population as SSI but pays much less. The average total AABD benefit was around $75 per month in the most recent comprehensive federal data, compared with more than $540 per month for the average SSI recipient in the states at the same time.8EveryCRSReport.com. Cash Assistance for the Aged, Blind, and Disabled in Puerto Rico
Federal funding for AABD is capped under Section 1108 of the Social Security Act, so the program cannot expand to meet demand.9Social Security Administration. Social Security Act Section 1108 Eligibility rules are tighter as well: AABD’s disability definition requires that an impairment completely prevent work, while SSI permits some earnings below the substantial gainful activity threshold. Puerto Rico’s poverty rate is close to 40%, the highest of any U.S. jurisdiction, so the benefit gap affects a large population.
Guam and the U.S. Virgin Islands run comparable block-grant programs with average monthly benefits of $197 and $180, respectively, in fiscal year 2020.10Social Security Administration. Supplemental Security Income and United States Territories The Northern Mariana Islands is the one territory whose residents do receive SSI, an eligibility written into the 1976 covenant under which the islands entered political union with the United States. The First Circuit had flagged that anomaly as evidence that tax status alone does not explain who is in and who is out.2Justia Law. United States v Vaello-Madero, No 19-1390 (1st Cir 2020)
Where the Law Stands After the Ruling
While Vaello Madero was pending, Congress considered extending SSI to all four excluded territories through Section 131001 of the Build Back Better Act, with a proposed effective date of January 1, 2024. That bill did not pass the Senate. No comparable statutory fix has taken its place.
The practical result is that roughly 3.2 million U.S. citizens in Puerto Rico remain ineligible for a federal benefit available to every citizen in the 50 states. Under the majority’s reasoning, differential treatment of territories in federal benefit programs will survive constitutional challenge whenever the government can point to some plausible justification, and tax status is an easy one to invoke. The two concurrences point the other direction. If a future case squarely presents whether the Insular Cases remain good law, at least one sitting Justice has already said they should not, and Justice Thomas has signaled that even the equal-protection framework underlying claims like Vaello Madero’s is open to reexamination.