Welfare and Taxes:

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

HRD-87-60: Published: Sep 15, 1987. Publicly Released: Sep 15, 1987.

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Pursuant to a congressional request, 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, and Food Stamp benefits, and federal income taxes, to Puerto Rico, the Virgin Islands, Guam, and American Samoa.

GAO found that: (1) federal costs would increase due to higher benefits, more recipients, and greater cost-sharing; (2) area SSI and Medicaid costs would decrease because of changing program burdens and more restrictive eligibility criteria; (3) federal tax revenues would increase in the short term, but might decrease over time because of lost business tax incentives; (4) area corporate and income tax revenues would decrease; and (5) area officials generally supported extending most program benefits, but opposed extending federal income taxes.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matters for Congressional Consideration

    Matter: Should Congress endeavor to make changes in the programs or taxes, it may wish to consider extending one program at a time to an area or subarea on an experimental basis, and determining the actual costs and the extent and nature of other effects.

    Status: Closed - Not Implemented

    Comments: Committee attempts to introduce legislation over several months have been frustrated by area representatives' opposition. GAO was told that each time a bill was drafted, congressional delegates presented the bills to their respective area governments, and each time the bills were opposed. The Committee does not expect to introduce legislation to implement the recommendation in the future.

    Matter: Should Congress endeavor to make tax changes, it may wish to consider gradually increasing taxes, such as by partially reducing section 936 credits, to raise revenue to cover the cost of extending welfare programs. In addition, should Congress consider extending U.S. income taxes to area residents and corporations, it may wish to assess the propriety of such actions in view of the issues raised by area officials.

    Status: Closed - Not Implemented

    Comments: Committee attempts to introduce legislation over several months have been frustrated by area representatives' opposition. GAO was told that each time a bill was drafted, area congressional delegates presented the bills to their respective area governments, and each time the bills were opposed. The Committee does not expect to introduce legislation to implement the recommendation in the future.

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