Each year people in U.S. territories pay more than $5 billion in federal taxes. However, most do not pay federal income tax. There is an assumption among many that what makes this unique tax treatment possible is the Insular Cases, a series of controversial early 1900s decisions that established a doctrine of “separate and unequal” treatment for people in overseas U.S. territories. This assumption creates a fear among many that overruling the Insular Cases could result in the automatic extension of federal taxes or other tax changes. 

A new report by Right to Democracy, a nonprofit that works to advance democracy, equity, and self-determination in U.S. territories, addresses these assumptions and fears head on. Overruling the Insular Cases: What About Federal Taxes?, a report co-authored by Right to Democracy Co-Director Neil Weare and tax law experts Sumaya H. Bouadi and Alex Golubitksy, unpacks how overruling the Insular Cases would not trigger the automatic imposition of federal income taxes or other feared tax changes on the territories. It also questions the common belief that federal policies related to taxes and benefits serve to benefit people in U.S. territories.

“This time of year, when people have taxes on their minds, is a good time to dispel the persistent myth that overruling the racist Insular Cases would trigger new taxes or disrupt the current tax framework. People do not have to choose between challenging the Insular Cases and protecting their wallet,” said Neil Weare, who grew up in Guam and Co-Directs Right to Democracy.

“While it may be a surprise to many, Congress has broad powers under the Constitution not only to treat people in territories different from people in states but also to treat people between states differently from each other based on differences in geography and economic considerations,” said Sumaya H. Bouadi, a tax law expert. “The U.S. Supreme Court has made clear for decades that the Uniformity Clause of the Constitution does not mandate the kind of strict uniformity many assume it does.” 

“The Supreme Court re-emphasized as recently as 2022 that Congress has special powers - powers unrelated to the Insular Cases - when it comes to questions of federal taxes and benefits in U.S. territories,” said Alex Golubitsky, a tax law expert with a specific focus on U.S. territories. “So overruling the Insular Cases would not prevent unique tax treatment for people in U.S. territories”.

Right to Democracy is working to challenge the Insular Cases and the undemocratic colonial framework they established. In 2024, responding to a campaign led by Right to Democracy, the U.S. Justice Department established a formal policy “that the racist language and logic of the Insular Cases deserve no place in our law.” This followed statements in 2022 by Supreme Court Justice Neil Gorsuch that the Insular Cases “have no foundation in the Constitution and rest instead on racial stereotypes” and by Justice Sonia Sotomayor that the Insular Cases “were premised on beliefs both odious and wrong.”

The new report is the first in what will be a series examining common questions and concerns about what impact overruling the Insular Cases will have on people in U.S. territories. As this series is being developed, Right to Democracy encourages people to reach out and share any questions or concerns they might have at [email protected]. 

The full report is available on Right to Democracy’s website at https://www.righttodemocracy.us/overruling_the_insular_cases.

Questions about the report can be directed to Neil Weare at [email protected].