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By Dujon Ricks
Rep. Meeks and Sen. Wyden Introduce Bill to Stop Private Prisons from Exploiting Tax Incentives for Profit
"This bill would better align our tax code with the American dream of upward mobility..."
Washington, DC – Rep. Gregory W. Meeks, a senior member of
the House Financial Services Committee, introduced H.R. 4255, the Ending Tax
Breaks for Private Prisons Act, which would disqualify privatized corrections
and detention centers from receiving tax subsidies unavailable to other
corporations.
The bill is a companion to legislation introduced by Senator Ron Wyden, Ranking Member of the Senate Committee on Finance. Currently, private prisons can qualify as Real Estate Investment Trusts (REITs) which are corporate entities that are taxed only when they distribute dividends. Rep. Meeks’ bill would disqualify private prisons from receiving REIT tax breaks, instead requiring them to be taxed– on both their corporate and shareholder levels – like any other corporation.“No sound policy reason exists as to why owners of private prisons receive favorable tax treatment and subsidies, which are not available to any other private entity. This tax oddity is even more concerning considering Republican attempts to pay for massive tax cuts for the wealthy by cutting benefits for low- and moderate-income households,” said Rep. Meeks. “Our tax system needs reforming to create opportunities for advancement, not to further line the pockets of the ultra-wealthy. This bill would better align our tax code with the American dream of upward mobility.”
“Private prisons make our communities less safe by focusing
on shareholder profits and doing nothing for rehabilitating people to become
productive citizens after they have served their sentence,” said Wyden, Ranking
Member of the Senate Finance Committee. “The twisted result of this bizarre
loophole is to fatten the profits of companies getting rich off mostly poor
people, worsening an already broken criminal justice system.”
Real Estate Investment Trusts, and their preferable tax
treatment, were created by President Dwight Eisenhower in 1960 to incentivize
commercial development and to allow ordinary investors an opportunity to reap
the financial benefits of that development. Without congressional input, the
Internal Revenue Service took an unprecedented step by allowing private prisons
to qualify as REITs beginning in 2013. The New York City Employees’ Retirement
System, under the leadership of Comptroller Scott Stringer, recently divested
its funds from private prison REITs citing alleged human rights abuses and
political risks.
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