California Lawmakers Want to Raise Taxes on For-Profit Immigrant Detention Operators

California lawmakers are seeking to target the deep pockets of for-profit contractors key to the Trump administration’s growing deportation campaign, amid outrage over the killing of U.S. citizens by federal immigration agents in Minneapolis.

A new state bill would raise taxes on companies that contract with the federal government to run immigration detention facilities, which hold thousands of men and women in California. AB-1633, introduced by Assemblymember Matt Haney, D-San Francisco, on Tuesday, would tax operators’ detention contract revenue by 50% annually and reinvest those funds into services supporting immigrant communities.

The first-in-the-nation bill aims to mitigate economic, emotional and social harms caused to the state as immigration authorities detain more residents, businesses lose workers and students skip school due to deportation fears, Haney said during a press conference on the bill on Wednesday.

“We will not allow these for-profit corporations to make hundreds of millions of dollars off of human suffering and family separation,” Haney said, flanked by Democratic lawmakers, gubernatorial candidate Tony Thurmond and immigrant advocates. “If you are going to impose this kind of terror on our state and on our people, we are going to tax you for the pain and harm that you’re causing.”

This comes as the fatal shootings of protesters Alex Pretti, an intensive care unit nurse, and Renee Macklin Good, a mother of three, have generated intense backlash in spaces as varied as professional basketball games, social media influencers’ baking feeds and Trump voter surveys.

U.S. Immigration and Customs Enforcement contracts with three private prison companies — Geo Group, CoreCivic and Management & Training Corporation — for about $560 million per year to run detention centers in the state, according to the California Immigrant Policy Center, a bill sponsor. The seven facilities currently jail more than 6,200 immigrants, ICE’s most recent figures show.

For years, detainees and immigrant advocates, as well as the California Attorney General, have reported that the facilities have failed to meet ICE’s own detention standards, with substandard medical care, unsanitary living spaces, inadequate access to food and other serious problems. Last year, 32 people died in ICE custody nationwide, the most in two decades. So far this year, six more detainees have died.

Alexandra Wilkes, a spokeswoman for the Day 1 Alliance — a trade organization representing Geo Group, CoreCivic and MTC — declined to comment on the new proposed tax, but defended the companies’ records.

“For more than 30 years, contractors have partnered with both Democratic and Republican administrations to provide vital services at their request, including safe, humane housing, quality medical and mental health care, and respectful, dignified care for individuals navigating the U.S. immigration system,” Wilkes said in a statement.

Without the contractors’ critical services, she added, more immigrants would likely be held in overcrowded local jails, alongside potentially dangerous individuals.

“Contractors do not make arrests, do not decide the length of detention, and play no role in determining the legal status of individuals in their care,” she said.

Under President Donald Trump, the federal government approved last summer an unprecedented $170 billion over four years for the Department of Homeland Security, which oversees ICE, Border Patrol and other agencies. Those funds include $45 billion for building new immigration detention centers and $30 billion to boost enforcement and deportation operations. The Senate is now considering a House-approved package that would send additional funding to DHS. The measure is largely opposed by Democrats, who are demanding more guardrails for ICE.

Kimberly Woo, a Bay Area community organizer, said her elderly family members were apprehended by ICE during their final interview to apply for permanent residency, after 20 years of living in the U.S. They were locked up in the state’s largest and newest detention center in the Mojave Desert, she said.

“Words cannot describe what visceral pain of seeing your elder relative who immigrated to this country to build a better life for our family, break down crying behind a glass screen window where it’s impossible to hug them and hold their hand,” said Woo, who works at the nonprofit Services, Immigrant Rights and Education Network. “No one deserves to experience the same inhumane pain, suffering, and loneliness that my loved one felt every day in that prison.”

California legislation previously tried to phase out all for-profit prisons and private detention facilities, but was blocked by the courts. Still, the state has broad authority to tax businesses as it sees fit, including contractors enabling detentions, Haney said.

He acknowledged the proposed 50% tax on the gross receipts from detention contracts (before operating expenses) would be much larger than most state taxes, and could threaten the companies’ ability to operate in the state. California’s corporate income tax is 8.84% on profits.

“If they look at this tax and they say, ‘That’s too high for us to pay,’ then they can leave,” Haney said. “And certainly, we’re not going to shed any tears if that’s the outcome.”

States may not impose taxes directly on the federal government, but can tax the income of federal employees and contractors. In addition, taxes are often targeted to activities perceived as causing social harm to discourage the taxpayer from creating additional harm or to mitigate it, said UC Davis law professor Darien Shanske, who teaches tax law.

“You can use the tax system to express values. And so, if you tax alcohol or tobacco or cannabis, maybe you accept that they’re going to be legal, but you have concerns about them,” said Shanske, who specializes in state and local taxation. “To the extent that California wants to express strong disapprobation … using the tax system to do that is not unprecedented or inappropriate.”

If AB-1633 is signed into law, the impacted companies would likely challenge it in court, as the tax would represent a significant blow to their business, Shanske said. The contractors may argue that the tax is in effect targeting federal agencies to curb the administration’s immigration crackdown.

Assemblymember Liz Ortega, D-San Leandro, said that while the killings of Pretti and Good were caught on widely circulated bystander cellphone videos, detention centers have continued to operate in relative obscurity, largely away from the public’s gaze. Most immigrants held by ICE have no criminal records.

“My question is, what is happening to the innocent people inside these detention centers where it’s dark, where there are no cell phones,” Ortega, a cosponsor of AB-1633, said. “This bill will continue to go along the path of holding these corporations accountable and ensuring that if we’re going to use our taxpayer dollars to continue this reign of terror, that they also pay their taxes.”

A separate California bill that Assemblymember Alex Lee, D-Milpitas, plans to introduce next week would eliminate state tax breaks for businesses that contract with DHS to provide goods or services, such as software companies, armed security services and transportation providers.