Welfare and Taxes: Extending Benefits and Taxes to Puerto Rico, Virgin Islands, Guam, and American Samoa

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As requested by the House Ways and Means Subcommittee on Public Assistance and Unemployment Compensation, GAO analyzed the potential effects of fully extending Supplemental Security Income (SSI), Aid to Families with Dependent Children (AFDC), Medicaid, foster care, Child Support Enforcement, Food Stamps, and federal income taxes to Puerto Rico, the Virgin Islands, Guam, and American Samoa. The United States treats these insular areas differently than states in providing federal aid and taxing income. Welfare coverage is generally more limited, leaving many needy individuals with less support, although it is sometimes more liberal than the states' counterpart programs. Area residents and business generally are exempt from federal taxes, and business tax incentives encourage the areas' economic self reliance. Recently, there has been congressional interest in making welfare programs and income taxes more comparable between the areas and states.

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