The nation's largest private prison company, Corrections Corporation of America, or CCA just announced
that they're considering converting the company to a Real Estate Investment Trust, which is a special tax designation for real estate companies. It might sound boring and unimportant, but here’s what it means: CCA makes money by incarcerating people and gets practically all its money from taxpayers. Now they want to do that and not even pay their taxes.
They've already done the paperwork and reorganization necessary to allow them to make this change. Now they’re just waiting for approval from the IRS before they move forward.
According to Wikipedia, a Real Estate Investment Trust
(or REIT) is "any corporation, trust or association that acts as an investment agent specializing in real estate and real estate mortgages." REITs can subtract dividends they pay to shareholders from their profits to reduce theirs taxes.
While we could debate why real estate trusts should or shouldn’t get special tax breaks in the first place, it's really not clear why operating for-profit prisons would qualify a company as an investment agent. Corporations across many sectors buy and sell real estate as part of their business, but that doesn't make them real estate companies. Why CCA should qualify isn’t clear.
Just to give you a sense of the scale of what CCA does, in 2011
, they took in $1.7 billion, almost all from contracts with government, and profited $162 million. They incarcerate more people than all but 3 states and the federal government, with about 92,000 beds. And they don't just run prisons for the states. They're also one of the biggest operators of immigration detention facilities.
We should stop wasting resources on companies like these, and instead focus our resources on educating and lifting up our people. Call CCA's representative Karin Demler at (615) 263-3005 to let her know that the least CCA can do is pay its taxes. And contact your representatives in Congress and let them know that the we stop spending money on private prisons and devote our resources to education and health care.