Newsom signs 25% tax on private detention centers

California Governor Gavin Newsom signed Assembly Bill 1633 into law earlier this week, imposing a 25% tax on the gross income of private detention facilities that partner with Immigration and Customs Enforcement (ICE). The legislation targets all eight privately operated ICE facilities currently located in the state, with the mandate taking effect on July 1, 2028. Newsom framed the measure as a direct response to federal immigration enforcement strategies, stating that if California cannot remove private facilities, it will target their profits.

The bill was one of twenty signed by Newsom on Tuesday. Revenue generated from the tax will be directed to a "Due Process for All Fund," which is designated for immigration-related services. In addition to the financial penalty, Newsom signed accompanying restrictions that ban the use of shock gloves in enforcement activities and aim to protect access to the court system. Newsom asserted that while the state cannot dictate federal immigration policy, activities within California borders remain subject to state law.

Hans von Spakovsky, a senior legal fellow and immigration expert at the conservative-leaning think tank Advancing American Freedom, argued that the primary intent of the tax is to prevent the federal government from securing private property in California. He noted that the federal government could instead convert existing federal properties, such as warehouses or office space, into detention facilities, as these assets are not subject to state taxation. Spakovsky suggested that if private contractors in California exit the market, ICE might look to neighboring states like Arizona or Nevada to lease facilities and maintain capacity.

According to reporting from the Department of Homeland Security (DHS), ICE currently relies on private contractors to meet its detention needs, avoiding the costs of constructing new facilities. Spakovsky cited ICE data indicating that the federal government's total detention capacity is approximately 66,000 detainees. If all eight California-based facilities suspended operations due to the tax burden, the overall national capacity would shrink. The state's facilities are owned by three entities: The GEO Group operates five facilities, Imperial Valley Gateway Center LLC operates one, and CoreCivic runs two facilities that were purchased by DHS in July. The CoreCivic contracts run through 2027 and 2029.

Spakovsky believes the federal government may begin evaluating alternative locations sooner than 2028 to secure necessary detention space. He posited that moving detainees to "friendlier" states would allow for quicker transport and leverage federal funding to attract private contractors in those regions. The office of Governor Newsom did not immediately respond to a request for comment from Fox News Digital.