California Imposes 25% Tax on Private Detention Centers

California Governor Gavin Newsom recently signed into law a bill that imposes a 25% tax on private detention centers partnering with Immigration and Customs Enforcement (ICE). This move has been framed as a way to counteract President Donald Trump’s aggressive immigration policies and the privatization of federal enforcement.

Newsom stated, “If we can’t kick out private facilities, we’ll go after their profits,” highlighting a commitment to challenge practices that he finds objectionable. However, some experts in immigration policy express concerns that this increased tax could lead to the federal government seeking alternative facilities that may not be ideal for housing detainees. A significant question arises: what happens if all eight ICE detention centers in California decide to shut down?

Hans von Spakovsky, a senior legal fellow and immigration expert at Advancing American Freedom, argues that this tax is essentially aimed at making it difficult for the federal government to find private property owners willing to lease space to them. He suggested that the government might have to look at federal properties—which would not be subject to California’s tax—as potential alternatives for detention facilities.

According to Spakovsky, this could involve repurposing underused federal buildings, including warehouses or offices. The newly passed law, known as AB 1633, is among 20 other measures signed by Newsom. When it takes effect on July 1, 2028, the tax will apply to the gross income of private detention facilities under federal, state, and local contracts. Proceeds from the tax will fund immigration-related services through a designated “Due Process for All Fund.”

Alongside the tax law, Newsom also enacted additional restrictions on detention practices, including a ban on the use of shock gloves for enforcement actions. He emphasized California’s stance: while state law can’t dictate federal immigration policy, actions within the state are still governed by local laws.

Still, critics like Spakovsky warn that the law could unintentionally restrict ICE’s operational capacity. He pointed out that ICE currently has enough detention space for about 66,000 individuals. If California’s private detention centers were to opt out due to the new tax, it could significantly diminish ICE’s overall capacity to detain individuals.

California houses eight ICE detention centers, all of which are privately operated. The GEO Group runs five, while Imperial Valley Gateway Center manages another. Two additional centers, recently acquired by the Department of Homeland Security, are operated by CoreCivic, with contracts extending into the coming years.

Although the law won’t take effect until 2028, Spakovsky speculated that federal authorities might start exploring other partnerships much sooner to meet their detention needs. He explained that if the state’s private contractors find the tax prohibitive, ICE may look to neighboring states like Arizona or Nevada, where they could find more cooperative local governments and facilities.

As this new policy takes shape, it’s clear that the implications for immigration enforcement in California—and possibly beyond—could be significant and multifaceted. The complexities of the situation continue to unfold.