California Gov. Gavin Newsom signed a first-in-the-nation law this week imposing a 25% tax on private companies that operate immigration detention facilities in the state, because apparently California had not yet found enough creative ways to make businesses regret being there.
The law, AB 1633, directs whatever revenue it collects into something called the “Due Process for All Fund” to support immigration-related services. So if you are a private detention company, congratulations: California will now tax you, and then spend your money on services for the people you are detaining. The circle of life, Sacramento-style.
You would think someone in Newsom’s shoes would have enough smart people around him to come up with something useful for Californians. Nope. Best they can offer is another big tax.
Newsom’s Big Signing Day Speech
Newsom announced the signing in a video posted to X, making sure everyone knew he was very concerned. These past two years Donald Trump has brought fear, anxiety, disruption, and stress to our immigrant community,” he said. So today, I signed a number of bills to strengthen transparency, to strengthen accountability and oversight around federal immigration enforcement and civil detention in our state.
Nothing says “accountability” quite like a tax that will inevitably be passed along to someone else.
AB 1633 was authored by Assemblymember Matt Haney, D-San Francisco, who framed the measure as making private detention companies financially responsible for effects he says their operations have on California communities. “For years, private corporations have made hundreds of millions of dollars locking people up for ICE while California families and communities are left to deal with the consequences,” Haney said in a press release. He added that the money would go “directly back to the communities being impacted.” Via a government fund. Administered by California. What could possibly go wrong.
The Companies in the Crosshairs
Two of the private companies operating immigration detention facilities in California under federal contracts are GEO Group and CoreCivic. GEO Group had already flagged concerns to investors about an earlier version of the bill that proposed a 50% tax, warning it could affect operations and cash flow. The final 25% rate is presumably what passes for mercy in Sacramento.
When asked about the potential financial impact and whether they plan to challenge the law, CoreCivic said it was “aware of this bill and currently reviewing it.” GEO Group did not respond by publication time, which is a perfectly reasonable reaction when California has just announced it is taking a quarter of your income.
What Comes Next for the First-in-the-Nation Law
California is now the first state in the country with such a tax on immigration detention operators, a distinction Haney celebrated and one that GEO Group’s lawyers are probably circling on a calendar. Legal challenges seem like a natural next step, especially given that the facilities operate under federal contracts, which tends to raise constitutional questions about state interference with federal immigration enforcement.
In the meantime, California gets to congratulate itself for being first at something, which is really what this was always about. Businesses operating in the Golden State are well acquainted with the routine: show up, work hard, and eventually the state will find a new way to tax you for it.
At least this time they built a fund with a nice name. Not much brainpower, but they’ve got this going for them.
