GAO-14-31: statehood would change 11 federal programs and the tax burden

In March 2014 the U.S. Government Accountability Office published report GAO-14-31, Puerto Rico: Information on How Statehood Would Potentially Affect Selected Federal Programs and Revenue Sources (published 4 Mar 2014; publicly released 31 Mar). It is a report to congressional requesters on fiscal implications of statehood, not an island press note.

Of 29 federal programs reviewed (~86% of federal spending on states or residents in FY2010), statehood would likely affect 11; in 3 more, eligibility could change indirectly; 15 would be unaffected. The spending scope depends on assumptions (eligibility options and participation rates if Puerto Rico were treated as a state in 2010 or 2011).

For the four largest programs with a likely change: Medicare FY2010 actual $4.5 billion; under statehood in 2010 estimated $4.5–$6.0 billion. Medicaid FY2011 actual $685 million; estimated $1.1–$2.1 billion (without nursing home/home health if CMS infrastructure is lacking). SNAP FY2011 similar program $1.9 billion; estimated $1.7–$2.6 billion. SSI similar program $24 million; estimated $1.5–$1.8 billion if residents were eligible as in a state.

On revenue, every reviewed item (individual and corporate income, employment, excise) would change: under statehood residents would pay federal tax on all their income. Individual income tax 2010: payments reported to the U.S./possessions ~$20 million; estimated under statehood $2.2–$2.3 billion. Corporate 2009: U.S. corps paid ~$4.3 billion on income of PR affiliates; estimated under statehood $5.0–$9.3 billion depending on behavioral assumptions.

The report also discusses economic and fiscal factors under statehood that could influence spending and revenue. GAO makes no policy recommendations; it incorporated comments from federal agencies and the government of Puerto Rico. There is a highlights translation (GAO-14-301). Estimated ranges ≠ executed disbursements or “theft.” Primary: gao.gov GAO-14-31. Cousin: none.

Source: U.S. Government Accountability Office. https://www.gao.gov/products/gao-14-31