Private prison investors win big under Trump’s tax plan

Under the Republicans' rewriting of U.S. tax laws, individual investors in private prisons will reap big rewards, said The Guardian on Thursday.

“It’s going to be great for the investors, banks and hedge funds that own shares in private prisons, and are dependent on increased incarceration and criminalization,” said Jamie Trinkle of the economic and racial justice cooperative Enlace.

The Republican tax overhaul awards a 25 percent reduction in taxation to investors in so-called real-estate investment trusts (REITS) from 39.6 percent to down to 29.6 percent. Two of the largest private prison corporations -- Corecivic and the GEO Group -- reorganized as REITS in 2013.

"With dividends of more than $430 million paid out by the two major private prison companies in 2017, in theory, prison investors could see an additional $50 million in dividend earnings next year, thanks to the GOP legislation," wrote The Guardian's Jamiles Lartey. "The actual figure will be lower than that, however, as some proportion of those shares are owned by institutional investors which are taxed differently from individuals. The exact breakdown between the two is not available in public filings."

Corecivic -- formerly known as Corrections Corporation of America (CCA) -- already benefitted massively by restructuring as a REIT, lowering its taxation rate from 36 percent in 2013 to just 3 percent in the first quarter of 2015.

Enlace and other organizations believe it's not too late to stem the economic growth of private prisons. The group has led divestment campaigns that urge investors to move money away from private prisons.

"Divestment campaigns have successfully pulled more than $4bn out of banks (principally Wells Fargo) and other organizations that invest in the industry," wrote Lartey.

Trinkle said, "Since the tax benefit goes directly to the investors, I think the divestment work actually becomes more important as a way to fight back and stop the flow of capital."

Read the full report here.