Top Finance Democrat offers bill to end tax breaks for private prison companies

Sen. Ron Wyden (Ore.), the top Democrat on the Senate Finance Committee, on Thursday introduced legislation to end tax breaks for private prison companies.

Wyden described the bill as a response to President Trump’s immigration policies.

“The private prison industry is booming, particularly with the Trump administration holding more immigrants in detention than any time over nearly the past 20 years. Companies that profit off of putting children in cages shouldn’t get tax breaks,” Wyden said in a statement. “My proposal is simple. Companies that make money from the Trump administration’s inhumane immigration policy and a criminal justice system that disproportionately imprisons people of color are going to pay taxes like any other corporation.”{mosads}

Private prison companies are often organized as real estate investment trusts (REITs) — whose gains from real estate holdings are not taxed at the corporate level and are only taxed at the individual level when the REITs’ shareholders receive dividends.

Under Wyden’s bill, companies that run private prisons and immigration detention centers would not be able to receive status as REITs and would have to pay taxes at both the corporate and shareholder levels.

Wyden has also introduced a version of this bill in the last Congress, along with Rep. Gregory Meeks (D-N.Y.).

Democrats in recent years have expressed interest in closing private prisons as part of an overhaul of the criminal justice system, with the 2016 Democratic Party platform calling for the closure of private detention centers.

Since Trump has taken office, liberals have particularly scrutinized private-prison companies because of their role in immigration detention.

A spokesperson for The GEO Group, a private prison company, criticized Wyden’s bill and said that the company doesn’t advocate for any specific immigration policies.

“Contract services providers are not the problem,” the spokesperson said. “Our company does not manage facilities that house unaccompanied minors, and we play absolutely no role in passing immigration or criminal justice laws and have never advocated for or against any immigration enforcement or criminal justice policies.” 

“Our company has operated legally as a Real Estate Investment Trust under a private letter ruling issued by the Internal Revenue Service in 2013 under the Obama Administration, and the services our company provides to the federal government today are in no way different than the high-quality services we provided for eight years under the Obama Administration,” the spokesperson added. “This legislation is an old, tired attack based on false narratives and myths and represents an attempt to enact immigration and criminal justice policies through the federal tax code.”

Wyden has been offering a series of tax bills in recent weeks, including those to curb tax breaks for donations designed to influence the college admissions process, end the carried interest tax breaks benefiting investment-fund managers and make it easier for those with student loan debt to save for retirement.

— Updated on June 14 at 9:42 a.m.