United States v. Vaello Madero

142 S.Ct. 1539

UNITED STATES, Petitioner

v.Jose Luis VAELLO MADERO

No. 20-303

Supreme Court of the United States.

Argued November 9, 2021

Decided April 21, 2022

Curtis E. Gannon, Deputy Solicitor General, for petitioner

Hermann Ferré, New York, NY, for respondent.

Brian H. Fletcher, Elizabeth B. Prelogar, Acting Solicitor Generals, Counsel of Record, Brian M. Boynton, Acting Assistant Attorney General, Edwin S. Kneedler, Deputy Solicitor General, Vivek Suri, Assistant to the Solicitor General, Abby C. Wright, Laura E. Myron, Attorneys, Department of Justice, Washington, DC, for Petitioner.

Hermann Ferré, Counsel of Record, Juan O. Perla, Robert Groot, Andrew Larkin, Curtis, Mallet-Prevost, Colt & Mosle LLP, New York, NY, John W. Ferré-Crossley, for Respondent.

Justice KAVANAUGH delivered the opinion of the Court.

The United States includes five Territories: American Samoa, Guam, the Northern Mariana Islands, the U. S. Virgin Islands, and Puerto Rico. This case involves Puerto Rico, which became a U. S. Territory in 1898 in the wake of the Spanish-American War.

For various historical and policy reasons, including local autonomy, Congress has not required residents of Puerto Rico to pay most federal income, gift, estate, and excise taxes. Congress has likewise not extended certain federal benefits programs to residents of Puerto Rico.

The question presented is whether the equal-protection component of the Fifth Amendment's Due Process Clause requires Congress to make Supplemental Security Income benefits available to residents of Puerto Rico to the same extent that Congress makes those benefits available to residents of the States. In light of the text of the Constitution, longstanding historical practice, and this Court's precedents, the answer is no.

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The Territory Clause of the Constitution states that Congress may "make all needful Rules and Regulations respecting the Territory ... belonging to the United States." Art. IV, § 3, cl. 2. The text of the Clause affords Congress broad authority to legislate with respect to the U. S. Territories.

Exercising that authority, Congress sometimes legislates differently with respect to the Territories, including Puerto Rico, than it does with respect to the States. That longstanding congressional practice reflects both national and local considerations. In tackling the many facets of territorial governance, Congress must make numerous policy judgments that account not only for the needs of the United States as a whole but also for (among other things) the unique histories, economic conditions, social circumstances, independent policy views, and relative autonomy of the individual Territories.

Of relevance here, Congress must decide how to structure federal taxes and benefits for residents of the Territories. In doing so, 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.

On the tax side, for example, residents of Puerto Rico are typically exempt from most federal income, gift, estate, and excise taxes. See 39 Stat. 954, as amended, 48 U.S.C. § 734 ; see, e.g. , 26 U.S.C. §§ 933, 2209, 4081 – 4084. At the same time, residents of Puerto Rico generally pay Social Security, Medicare, and unemployment taxes. 26 U.S.C. §§ 3121(e), 3306(j).

On the benefits side, residents of Puerto Rico are eligible for Social Security and Medicare. § 3121(e) ; 42 U.S.C. §§ 410(h) – (i), 1301(a)(1). Residents of Puerto Rico are also eligible for federal unemployment benefits. 26 U.S.C. § 3306(j) ; see also House Committee on Ways and Means, Green Book: Background Material and Data on the Programs Within the Jurisdiction of the Committee on Ways and Means, App. A (24th ed. 2018).

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. One example is the Supplemental Security Income program, which Congress passed and President Nixon signed into law in 1972. 86 Stat. 1465. The Supplemental Security Income program provides benefits for, among others, those who are age 65 or older and cannot financially support themselves.

To be eligible for Supplemental Security Income, an individual must be a "resident of the United States," 42 U.S.C. § 1382c(a)(1)(B)(i), which the statute defines as the 50 States and the District of Columbia, § 1382c(e). A later statute included residents of the Northern Mariana Islands in the program. Note following 48 U.S.C. § 1801 ; 90 Stat. 268. But residents of Puerto Rico are not eligible for Supplemental Security Income. Instead, the Federal Government provides supplemental income assistance to covered residents of Puerto Rico through a different benefits program—one that is funded in part by the Federal Government and in part by Puerto Rico. Notes following §§ 1381-1385.

The dispute in this case concerns a claim for Supplemental Security Income benefits by a resident of Puerto Rico named Jose Luis Vaello Madero. In 2013, Vaello Madero moved from New York to Puerto Rico. While he lived in New York, Vaello Madero received Supplemental Security Income benefits. After moving to Puerto Rico, Vaello Madero no longer was eligible for Supplemental Security Income benefits. Yet for several years, the U. S. Government remained unaware of Vaello Madero's new residence and continued to pay him benefits. The overpayment totaled more than $28,000.

Seeking to recover those errant payments, the U. S. Government sued Vaello Madero for restitution. In response, Vaello Madero invoked the U. S. Constitution. Vaello Madero argued that Congress's exclusion of residents of Puerto Rico from the Supplemental Security Income program violated the equal-protection component of the Fifth Amendment's Due Process Clause.

Vaello Madero's constitutional argument prevailed in the District Court and the Court of Appeals, 956 F.3d 12 (C.A.1 2020), and we granted certiorari, 592 U. S. ––––, 141 S.Ct. 1462, 209 L.Ed.2d 179 (2021). We respectfully disagree with those Courts. In our view, this Court's precedents, in addition to the constitutional text and historical practice discussed above, establish that Congress may distinguish the Territories from the States in tax and benefits programs such as Supplemental Security Income, so long as Congress has a rational basis for doing so.

In Califano v. Torres , the Court addressed whether Congress's decision not to extend Supplemental Security Income to Puerto Rico violated the constitutional right to interstate travel. 435 U.S. 1, 98 S.Ct. 906, 55 L.Ed.2d 65 (1978) (per curiam ). Applying the deferential rational-basis test, the Court upheld Congress's decision. The Court explained that Congress had exempted residents of Puerto Rico from federal taxes. And the Court concluded that Congress could likewise treat residents of Puerto Rico differently from residents of the States in the Supplemental Security Income benefits program. Id ., at 3–5, and n. 7, 98 S.Ct. 906.

A few years later, in Harris v. Rosario , the Court again ruled that Congress's differential treatment of Puerto Rico in a federal benefits program did not violate the Constitution—this time, the equal-protection component of the Fifth Amendment's Due Process Clause. 446 U.S. 651, 100 S.Ct. 1929, 64 L.Ed.2d 587 (1980) (per curiam ). The Court stated that the Territory Clause permits Congress to "treat Puerto Rico differently from States so long as there is a rational basis for its actions." Id ., at 651–652, 100 S.Ct. 1929. Citing the prior decision in Torres , the Court noted that Congress's tax laws treated residents of Puerto Rico differently from residents of the States. And the Court concluded that Congress could do the same for that benefits program. 446 U.S. at 651–652, 100 S.Ct. 1929.

Those two precedents dictate the result here. The deferential rational-basis test applies. And Puerto Rico's tax status—in particular, the fact that residents of Puerto Rico are typically exempt from most federal income, gift, estate, and excise taxes—supplies a rational basis for likewise distinguishing residents of Puerto Rico from residents of the States for purposes of the Supplemental Security Income benefits program. See Torres , 435 U.S. at 5, n. 7, 98 S.Ct. 906 ; Rosario , 446 U.S. at 652, 100 S.Ct. 1929. In devising tax and benefits programs, it is reasonable for Congress to take account of the general balance of benefits to and burdens on the residents of Puerto Rico. In doing so, Congress need not conduct a dollar-to-dollar comparison of how its tax and benefits programs apply in the States as compared to the Territories, either at the individual or collective level. See Torres , 435 U.S. at 3–5, and n. 7, 98 S.Ct. 906 ; Rosario , 446 U.S. at 652, 100 S.Ct. 1929. Congress need only have a rational basis for its tax and benefits programs. Congress has satisfied that requirement here.

Moreover, Vaello Madero's position would usher in potentially far-reaching consequences. For one, Congress would presumably need to extend not just Supplemental Security Income but also many other federal benefits programs to residents of the Territories in the same way that those programs cover residents of the States. And if this 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. Doing that, however, 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 Constitution does not require that extreme outcome.¹

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The Constitution affords Congress substantial discretion over how to structure federal tax and benefits programs for residents of the Territories....