Empty Promise 1: Private Prisons Help the Local Tax Base
The private prison industry is being recognized as the scandal- plagued industry that it is. A survey conducted by Lake Snell Perry & Associates found that 60 percent of registered voters agreed that "there are some things that private companies are just not qualified to do, and running prisons is one of them."
One of the benefits claimed by private prison advocates is that they contribute to the local tax base.
REALITY: Private Prison Operators Often Don't Pay Their Fair Share of Taxes
- Corrections Corporation of America (CCA) was brimming with optimism about its facility in Appleton, Minnesota, during its first quarter 2006 conference call with shareholders. Though the company was upbeat about profits, CCA officials were contesting the property valuation of this facility with county officials because of the tax implications.
- In 2002, CCA reached a settlement with the IRS to pay $54 million in back taxes. CCA's representatives said the company would continue to appeal the IRS' findings. The IRS questioned the validity of a previous tax avoidance structure, and CCA was forced to pay delinquent taxes.
- A study by Good Jobs First (Jail Breaks: Economic Development Subsidies Given to Private Prisons) concluded that state and county governments have been spending large sums of taxpayer money providing economic development subsidies to private prisons. The researchers also found that not one of the dozens of economic development officials interviewed could cite any formal economic impact study or cost-benefit analysis related to the private prisons.