What makes the Corporate Tax Scam of 2017, in the words of Ruth Marcus, "just to be really clear, worst piece of domestic policy in our lifetime?"
There are so many candidates, including the provision pertaining to real estate investment trusts, which USC professor of law, economics, and political science Edward McCaffrey explains
allows real estate investors to get a special 20% tax rate like other small businesses -- even without paying significant wages to anybody, unlike other businesses....
Take commercial real estate, to name a large and suspicious example. Real estate investors like Trump will see more generous depreciation schedules, continued deductibility for interest and lower tax rates on the business forms that hold their real estate, like real estate investment trusts -- all without having to actually hire workers.
Unsurprisingly, the private prison industry is anxious to take advantage of this loophole. Jamiles Lartey of The Guardian has found that Corevic, formerly Corrections Corporation of America, paid
an effective tax rate in the first quarter of 2015 of just 3%.
Lauren-Brooke Eisen, an attorney at the Brennan Center for Justice, said: “The way they are able to get away with that, is that they’re not allowed to keep a lot of cash on hand, they have to give it back to investors though dividends. But it allows them to have an incredibly low tax rate.”
According to Eisen, prison companies have essentially argued that renting out cells to the government is the equivalent of charging a tenant rent, thus making such business primarily a real estate venture. In her new book, Inside Private Prisons, Eisen examines the way this classification has boosted industry earnings.
When in February Attorney General Sessions rescinded the order issued by President Obama for the Federal Bureau of Prisons to phase out contracts with private prisons, it affected only the 18% of federal prisoners held in private facilities, not the 8% of state prisoners or 65% of immigration detainees held in private facilities (the latter controlled by the Department of Homeland Services).
Nevertheless, Sessions' move, the tax bill, and what Lartey characterizes as "the cosy (sic) relationship Trump has had with the industry overall" suggest increased use of private prisons, despite (or perhaps because), as the- Deputy Attorney General Sally Yates wrote (as reported in a separate Guardian article)
research had found private prisons “simply do not provide the same level of correctional services, programs, and resources” and “do not save substantially on costs” either. Essential government education and training programs for prisoners “have proved difficult to replicate and outsource” in the private sector, she said.
Well, that, and if there is a profit, there will be more and if there are empty beds, a way will be found to fill them. Beware, then, of (alleged) efforts at criminal justice reform- like this one from New Jersey Democratic senator Cory Booker- which are silent on the issue of private prisons, which encourage mass incarceration and discourage rehabilitation. The Corporate Tax Scam of 2017- which all Senate and House Democrats voted against, as did no Senate Republican- was a big Christmas present to the industry.
And then watch how some Republicans who voted for this horrendous piece of legislation will pose as criminal justice reformers in 2018, and recognize them for the poseurs they are.
Post a Comment