A proposal to strip certain California tax breaks from corporations contracting with federal immigration enforcement agencies is making its way through the state legislature. But legal experts say the measure could face constitutional challenges similar to past California immigration laws struck down in the courts.
South Bay Area Assemblymember Alex Lee says his bill would send a message to corporations that “they need to be on the right side of history.”
"You’re already seeing corporations changing their behavior, trying to either gamify the system by stopping this bill, or they’re already changing some of their patterns or rethinking their contracts because of legislation like this."
Lee says his bill is defensible in court despite similarities to a 2019 law banning private detention facilities that was later struck down by a federal appeals court for interfering with immigration detention operations. His bill uses tax policy rather than implementing a direct ban.
But UCLA tax law professor Kirk Stark says that might create new legal problems.
"Precisely because it is facially discriminatory against contractors that do business with the federal government."
Another similar bill would impose an annual 50% tax on revenue generated by private detention facility operators.
Stark says states have historically used tax policy to influence corporate behavior, but that today’s political landscape between California and the federal government has become increasingly partisan.
Both bills cleared the Assembly last week and now head to the Senate.