On This Tax Day, the Myths About U.S. Territories and Taxation

Public debate about U.S. territories is often shaped by unsupported assumptions or even outright falsehoods — especially on the issue of taxes. Addressing these myths and misconceptions is important to de-normalize the undemocratic colonial rule of more than 3.6 million people in Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands. 

Tax Day gives us a timely opportunity to address some common misconceptions, which we unpack further in our new report, Taxation Without Representation: Colonial Narratives Then and Now.

#1: Why should territories complain about their political status? They don’t pay taxes!

Fact: This is simply false. People in U.S. territories pay billions in federal taxes a year. But whether they paid more taxes, fewer taxes, or no taxes at all, no option would make undemocratic rule acceptable. The core issue is not just taxation, but the broader problem of exercising federal power over people who lack meaningful checks against that power. The rallying cry of “taxation without representation” in the 13 colonies was really about political legitimacy, consent, and limits on unrepresented authority. The Declaration of Independence turns 250 years old this year, and it clearly states that governments derive their “just powers from the consent of the governed.” There’s no tax dollar amount at which that becomes false. Fundamental political rights should not be “means-tested” based on how much a population sends to the Treasury. 

#2: Wait, so people in territories pay federal taxes?

Fact: Yes. While most don’t pay federal income tax, people in U.S. territories pay many federal taxes, including federal payroll taxes, Medicare, Social Security, and more. In fact, they pay more than $5 billion a year in federal taxes, and since 2000, have paid more than $100 billion. 

#3: Ok, but they shouldn’t complain, they don’t pay all federal taxes.

Fact: Democratic rights should not depend on hitting some tax threshold. There’s no principled point at which paying “some” rather than “all” taxes makes undemocratic rule acceptable. Back when the 13 colonies shouted “no taxation without representation,” they also weren’t paying all the same taxes as a resident of Great Britain. In fact, back in the 1760s, the average tax burden was 26 shillings for a resident of Great Britain, compared with 1 shilling for the average resident of the New England colonies, a gap nearly three times larger than in U.S. territories today. Even with that disparity, “partial” taxation without representation was deemed wholly unjustified. If it was unjustified back then, it’s still unjustified now.

#4: They shouldn't complain, after all, territories are an inordinate fiscal drain.

Fact: The overwhelming majority of U.S. states and territories receive more from the federal government than they contribute to the U.S. Treasury. Ultimately, the data does not support the idea that U.S. territories are some kind of outlier in the amount of benefits they receive versus what they put in.

According to a recent CENTRO Report, Puerto Rico ranked 20th in total net receipts from the federal government, meaning 19 states were a bigger overall “drain” than Puerto Rico.

Even on a per-capita basis, accounting for population differences, 10 states had higher per-capita net receipts. In other words, the available data does not show Puerto Rico or any other territory as an exceptional outlier, much less serve as a justification for undemocratic rule.

Colonial rule persists in 2026 for many of the same reasons it did in the 1770s — colonial double standards, discrimination, and the condescension and ignorance of colonial rulers an ocean away, knowing little about the people and communities they govern. Colonial rule — and the taxation accompanying it — are normalized and destigmatized.

If people in the states know anything about the territories, it’s often the idea that undemocratic rule is morally justifiable because of differences in tax rules. Normalizing undemocratic rule makes the problem invisible. Regardless of what future political status option the people of each territory choose, U.S. democratic principles and international commitments demand these communities have a government — and system of taxation — they consent to and can hold politically accountable.

By counteracting these insidious myths and misconceptions — and the assumptions they’re built on — we can unravel the colonial narratives that deny democracy, equity, and self-determination to over 3.6 million people in U.S. territories.

Edoardo Ortiz is the Advocacy Director at Right to Democracy, where he helps lead policy, lobbying, communications, and narrative-change strategy focused on advancing democracy, equity, and self-determination for the 3.6 million people living in U.S. territories. He has previously held policy roles in the Illinois Legislature, at Abt Associates, and in local government and consulting, building a track record in legislative development, research, public communications, and coalition-centered policy work.

Neil Weare grew up in Guam and is the Co-Founder and Co-Director of Right to Democracy, which works to advance democracy, equity, and self-determination in U.S. territories. As a civil rights attorney, he has led efforts to overrule the Insular Cases and the colonial legal framework they established. Prior to attending Yale Law School, he worked for Guam’s non-voting delegate to the U.S. House of Representatives and in the Guam Legislature.

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