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Thursday, October 11th, 2012

How Speculating on Prisons Leads to Mass Incarceration

Author:     CHRISTOPHER PETRELLA
Source:     truthout.org
Publication Date:     Tuesday, 09 October 2012 09:48
Link: How Speculating on Prisons Leads to Mass Incarceration
Stephan:   This is part of the new American Slavery trend that has created the largest gulag in world history. With only 5 per cent of the world's population the United States incarcerates 25 per cent of the world's prisoners. And the Right's drive to privatize prisons, as this report spells out, is just making a horrible situation worse. CCA is another example of corporate evil. There is no reason but profit that this company should even exist. It is nothing more than a scheme to take a governmental responsibility -- prisons -- and turn this government task into a profit center for a few insiders.

Corrections Corporation of America (CCA)’s potential Real Estate Investment Trust (REIT) conversion is not its first foray into this form: The last round resulted in prison speculation and huge financial losses for outsider investors.

Last spring, the nation’s largest private prison owner and operator, Corrections Corporation of America (CCA), announced its plan to assess the feasibility of a Real Estate Investment Trust (REIT) conversion.

Over the last quarter, Tennessee-based CCA publicized its potential REIT conversion as a way to ‘increase long-term shareholder value’ by reducing both its federal and state corporate tax liability to zero. In exchange for such a handsome tax rate, CCA must meet REIT guidelines by distributing at least 90 percent of its taxable income to shareholders annually in the form of dividends.

Although an REIT conversion would likely benefit CCA’s shareholders – 7 percent of whom are insiders – it would undoubtedly harm small communities, and states in some cases, that rely on CCA for tax revenues. By converting the company to an REIT, CCA insiders would not only slash their company’s effective tax rate from 37.2 percent (equivalent to about $92 million in 2011) to zero, but would actually pay themselves an additional $7 million next year. […]

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