About CoreCivic: Gov. Phil Scott’s partner in the prison business

Governor Phil Scott’s administration is planning to create (hire a company to design and build)  a 925- bed state prison/treatment complex in Franklin County. The plan involves partnering with the for-profit prison corporation CoreCivic (formerly Corrections Corporation of America). According to Vtdigger.com: [Sec. Vermont Agency of Human Services]  Al Gobeille is proposing that the state contract out the design, construction and financing to a private entity, which then would lease the facilities to the state for 25 years. The state would make annual appropriations to pay for the use of the campus.[added emphasis]

For now, many specific details are a moving target but this feature of the proposed dealVermont would lease the facility from CoreCivicis pretty interesting in light of recent changes in CoreCivic’s business model.corecivicVTAHS1

Historically CoreCivic political donations and lobbying are directed overwhelmingly to Republican Party candidates at all levels of government. They even ponied up $250,000 to support Trump’s inauguration celebration last year.

And  under the Obama administration as contracts dwindled, for-profit prisons stocks fell. CoreCivic and another major for-profit prison corporation, GEO Group, were looking at hard times.

Then in 2013  CoreCivic (then CCA) and the GEO Group (that together own 80% of all US for-profit prison facilities) restructured themselves more profitably as real estate investment trusts (REIT). Now, thanks to the recent GOP tax code changes signed into law by Donald Trump, these two for-profit prison corporations will reap a windfall

The Guardian.com reports: Under the new GOP law, investments in so-called “real estate investment trusts” (REIT) will see a 25% reduction in tax, from 39.6% down to 29.6%. [added emphasis]

Before converting to a reit in 2013, Corecivic was subject to a 36% corporate tax rate. After the reorganization, it reported paying an effective tax rate in the first quarter of 2015 of just 3%.

Sooo much winning for prison corps!

And here’s how it works. 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.

It is a debate whether or not a lease deal with CoreCivic is good for Vermont. But there’s little doubt it’s REAL GOOD for CoreCivic. In fact the profits might seem almost criminal.

2 thoughts on “About CoreCivic: Gov. Phil Scott’s partner in the prison business

  1. The Trump administration was ready from Day 1 to reward the owners and investors of CoreCivic and Geo. On February 23, 2017, just a month after Trump’s inauguration, Attorney General Jeff Sessions withdrew an Obama-era Justice Department memo that set a goal of reducing and ultimately ending the Justice Department’s use of private prisons.

    On an earnings call with stock analysts that same week, executives at GEO Group emphasized that their company had a total of 5,000 spots in its prisons that were either unused or underutilized. GEO senior vice President David Donahue put it fairly bluntly, telling analysts that their idle and underutilized cells are “immediately available and meet ICE’s national detention standards.”

    They may not be able to staff the agencies, fund the government, or write an executive order that will withstand a court challenge, but they can sure reward their friends and donors.

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