The Effects of Prison Reform on Taxes

How many times have you heard someone lament that their hard earned paycheck is going towards the welfare of criminals?  As a supporter of prison reform, I usually remind people who say this that the Eighth Amendment protects US citizens against cruel and unusual punishment and forcing inmates to live in squalor is, in fact, cruel and unusual.  What is also overlooked is that it is the shortcomings of our prison system that places a burden on the taxpayers.  In fact, prison reform can benefit our economy in many ways, including lowering the prison population, decreasing the likelihood that someone will reoffend, and adding more skilled workers to our workforce.

The United States has one of the highest incarceration rates in the world, with millions of individuals cycling through the prison system annually.  It is estimated that federal, state, and local governments collectively spend over $80 billion each year on corrections. This expenditure is funded primarily by taxpayer dollars, and the burden continues to grow as prison populations swell.  This money is primarily spent on food and housing, health care, which every inmate is entitled to, as well as the security measures and staff needed to run the prison.

Advocates have spoken out about decriminalizing drug related offenses.  Many non-violent offenders are convicted of drug-related crimes.  If laws were changed to lower the sentencing for drug-related offenses and either keep those individuals out of prison or divert them into community-based programs, we can significantly reduce the prison population. This approach not only costs less but also has a better track record of helping individuals reintegrate into society.  Even reducing the sentences could potentially lower costs.  Some people are serving life sentences for drug offenses, which has been viewed as extreme for an offense that in most cases both parties mutually consent to.

Those in support of prison reform are trying to change the focus of incarceration to rehabilitative services, such as educational programs and mental health and addiction treatment.  While some taxpayers may view these programs as an unnecessary expense, providing inmates with treatment and helping them develop skills that they can use once released from prison has been proven to greatly reduce the likelihood that they will commit another crime that puts them back in the prison system with an even longer sentence.  One could almost view it as an investment: allowing incarcerated individuals the chance to improve themselves while serving their sentence can make them better members of society upon release.  Inmates who are serving life sentences without the possibility of parole are often denied access to rehabilitative services, however they can still benefit society if they are allowed rehabilitative care.  They can use these skills during their sentence and if by some chance they are released due to changes in the law, they would be able to contribute to society as a whole.

Let’s not forget, a focus on rehabilitation means creating more able bodied workers.  We are already experiencing the negative effects of an aging workforce and many companies are short staffed.  As a society, we should support any effort that creates more skilled employees.  Furthermore, many incarcerated people are employees of some of the largest corporations in the US.  The American Legislative Exchange Council (ALEC), an organization backed by some of the US’s largest corporations, has drafted legislation in support of the current prison industrial complex.  It is in their best interest to keep inmates behind bars where they can pay them wages at a fraction of the average American worker, while subsequently claiming that their products are made in the USA.

Which means that many of these companies are receiving the benefits of employing American workers without having to pay minimum wage.  One could argue that any prisoner should be lucky enough to have a job, but is it really a stroke of good fortune, if that job is only paying them $1- $2 per hour?  While simultaneously supporting legislation that prevents them from leaving prison and denying them access to programs that would enable them to stay out of prison should they ever finish their sentence?  It could be just as easily argued that this is simply slavery with an update - Serfdom 2.0.

But here is where the tax law comes in (after all this is a tax blog).  Most tax credits for corporations who use domestic labor don’t have any specifications on what means these corporations should use to employ workers.  So, while the members of ALEC are getting the benefits of employing workers at a fraction of the cost, they are also able to take advantage of tax laws that were put in place to encourage companies to create jobs for American workers - jobs that have a living wage.  And this just creates a greater strain on the taxpayers.  Corporations are finding ways to evade their tax burden and that burden has to be offset by higher taxes on the average American.

Why do I care?  As some of my clients know, prison reform is something I have a personal investment in because someone very important to me served time in prison.  Even though they are no longer incarcerated and spent most of their time in a minimum security facility, the experiences they had while they were there were in my opinion unacceptable.  Even if someone has committed a crime, most people serving time are non-violent offenders and should still be treated with some basic human decency.  Furthermore, while I work with a lot of business owners, most of my clients are small business owners, which means they are just your average taxpayer who is experiencing the ever increasing cost of living.  The cost of living is in part being increased by the greed of corporations, like the members of ALEC.  It’s highly unlikely that any of those corporations will ever be one of my clients.  My intention with going to law school is to protect the interests of my clients and one of the ways I believe I can do that is by advocating for prison reform.  Specifically by ensuring these corporations  can’t “double-dip” by employing incarcerated individuals and taking advantage of tax credits that are meant for companies who are actually trying to act in the best interest of society as a whole.

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