California Gov. Gavin Newsom is escalating his long-running confrontation with President Donald Trump, signing a new law that could make it substantially more expensive for private immigration detention companies to operate in the state.
The legislation, AB 1633, establishes a 25% tax on the gross income of private detention facilities doing business in California. The policy could have major implications for Immigration and Customs Enforcement, better known as ICE, because California’s eight federal immigration detention facilities are privately operated.
Newsom has openly presented the measure as an effort to challenge the Trump administration’s immigration enforcement agenda.
“If we can’t kick out private facilities, we’ll go after their profits,” Newsom said while announcing the legislation.
The new law is scheduled to take effect July 1, 2028, setting up another potential clash between California officials and the federal government over immigration, taxation and the limits of state authority.
Newsom Takes Aim At Private Detention Companies
AB 1633 applies a 25% tax to the gross income earned by qualifying private detention facilities from federal, state and local government contracts.
Revenue collected under the law is designated for a “Due Process for All Fund,” which is intended to support immigration-related legal services and other assistance.
The legislation was one of roughly 20 bills Newsom signed as part of a broader package addressing immigration enforcement in California.
The governor argues that while California cannot directly control federal immigration law, the state can regulate certain activities and businesses operating within its borders.
“We may not be able to dictate federal immigration policy, but we can make clear that activities taking place in California will be subject to California law,” Newsom said.
The package also included additional restrictions on immigration enforcement practices, including a ban on the use of shock gloves during enforcement activity and measures aimed at protecting access to the court system.
Trump Administration Could Face Higher Immigration Enforcement Costs
The legislation could ultimately create new financial and logistical challenges for the Trump administration.
Private contractors play an important role in ICE detention operations because they allow the federal government to house detainees without building and operating every facility itself.
A substantial new tax could increase operating expenses for those companies.
If companies respond by raising their contract prices, federal taxpayers could face higher costs.
If some operators decide the California market is no longer financially attractive, ICE could also be forced to search for replacement detention capacity.
That possibility has prompted warnings from conservative immigration policy experts.
Conservative Expert Warns California Policy Could Backfire
Hans von Spakovsky, a senior legal fellow and immigration expert with the conservative organization Advancing American Freedom, argues that California’s tax is designed to discourage private companies from working with federal immigration authorities.
He said the federal government could respond by turning to federally owned property that California cannot tax in the same way.
Potential alternatives could include warehouses, office buildings or other federal properties capable of being converted for detention purposes.
That would create an important question for California policymakers: Would the new tax actually reduce federal immigration enforcement, or merely change where and how detainees are housed?
Spakovsky believes the latter outcome is possible.
ICE Detention Capacity Is A Major Issue
The dispute comes as detention capacity remains a central part of Trump’s immigration agenda.
According to figures cited by Spakovsky, ICE has nationwide detention capacity for approximately 66,000 people.
The federal government relies on a combination of government-owned facilities and private contractors to maintain that capacity.
California currently has eight ICE detention facilities, according to Department of Homeland Security reporting, and all are privately operated.
Five are associated with The GEO Group, one of the largest private corrections companies in the United States.
Another facility is owned by Imperial Valley Gateway Center LLC.
Two additional sites were purchased by the Department of Homeland Security but continue to be operated by CoreCivic under existing contracts.
That makes California an important part of the federal immigration detention network.
Could Detention Jobs And Federal Spending Leave California?
One potential consequence of the law has received less attention: jobs and federal spending.
Private detention facilities employ workers in a wide range of positions, including security, health care, administration, maintenance, transportation and food service.
If companies reduce their California operations, some of those jobs could potentially move elsewhere.
Federal contract dollars could move with them.
Spakovsky suggested that states such as Arizona or Nevada could become alternatives if the federal government needs additional detention space outside California.
Under that scenario, individuals detained by federal immigration authorities in California could be transported to facilities in neighboring states.
That could create additional transportation expenses for taxpayers while also making it more difficult for some families and attorneys to visit detainees.
At the same time, communities outside California could benefit from new federal contracts and employment opportunities.
Newsom And Trump Clash Over Immigration Policy
The new law reflects a much larger political struggle between Newsom and Trump.
Trump has made border security, immigration enforcement and deportations major priorities of his presidency.
Newsom has positioned California as one of the strongest state-level opponents of the administration’s immigration policies.
Their disagreement raises an important constitutional issue involving the balance of power between Washington and the states.
The federal government holds primary authority over immigration policy and enforcement.
States, however, retain substantial authority over taxation, business regulation and activities occurring within their borders.
California is attempting to use those state powers to influence how federal immigration enforcement operates.
Whether courts ultimately allow the 25% detention tax to stand could become an important legal question.
Supporters Say California Has A Right To Regulate Private Businesses
Supporters of the new law argue that California has legitimate authority to tax and regulate private companies operating in the state.
They also oppose the use of private companies to house immigration detainees, arguing that detention should not become a profit-driven business.
From that perspective, AB 1633 represents an effort to discourage private participation in the detention system while raising money for immigration-related legal assistance.
Newsom has framed the legislation as part of California’s broader responsibility to protect immigrant communities.
Critics Say The Federal Government Will Simply Adapt
Opponents question whether the policy will accomplish its stated objective.
Rather than reducing immigration detention, critics argue that the federal government could simply shift operations elsewhere.
Washington could potentially expand federally owned facilities, move detainees to other states or negotiate new agreements with contractors outside California.
Such a move could leave California with fewer federal jobs and less contract spending without significantly changing national immigration enforcement.
That possibility makes the economic consequences of AB 1633 especially important.
For taxpayers, the central question may be whether the policy ultimately reduces costs, raises costs or merely transfers those costs to another state.
What The New Law Could Mean For Taxpayers
Although the legislation primarily targets private detention companies, taxpayers could eventually feel the effects.
If contractors pass the cost of California’s 25% tax along to the federal government, detention expenses could rise.
If ICE relocates detainees to neighboring states, transportation and logistical costs could also increase.
Alternatively, if the federal government expands its own facilities, taxpayers could face construction, renovation and staffing expenses.
The financial consequences will depend largely on how ICE and its contractors respond before the law takes effect.
Because AB 1633 does not become effective until July 1, 2028, both the federal government and private companies have significant time to develop alternatives.
Legal Challenges Could Be Coming
California’s latest immigration law could also face scrutiny in federal court.
A major issue would be whether the tax represents a legitimate exercise of California’s taxing authority or whether it unlawfully interferes with federal immigration enforcement.
That question could become increasingly important if the law materially affects ICE’s ability to detain individuals in California.
Federal-state disputes have repeatedly reached the courts when states attempt to regulate activity connected to federal policy.
AB 1633 could eventually become another test of that relationship.
Another Flashpoint In The Newsom-Trump Rivalry
The legislation also adds another chapter to the increasingly visible rivalry between Newsom and Trump.
Newsom has become one of the Democratic Party’s most prominent critics of the president, while Trump has frequently criticized California’s leadership on immigration, crime, taxes and government spending.
The detention tax gives both sides another major policy issue around which to rally supporters.
For conservatives, the measure is likely to raise concerns about whether California officials are making it harder and more expensive for federal authorities to enforce immigration laws.
For Newsom and his allies, the law represents an effort to use California’s state authority to resist policies they strongly oppose.
The Bigger Question Facing California
The real impact of the new law may not become clear for several years.
Private detention operators will need to decide whether California remains financially viable once the tax takes effect.
ICE will have to determine whether existing facilities remain the best option or whether alternative detention capacity should be developed elsewhere.
California lawmakers will also have to consider whether the law produces the outcome they intended.
If facilities close but federal detention operations simply move to Arizona, Nevada or other states, California could lose jobs and federal investment without substantially reducing immigration enforcement.
If the tax successfully changes federal contracting practices, however, supporters will likely view it as evidence that states can influence federal policy through their own regulatory powers.
Either way, Newsom’s latest move ensures that California will remain at the center of the national immigration debate.
The showdown between Sacramento and Washington is no longer only about political rhetoric.
It is increasingly about taxes, federal contracts, taxpayer costs, jobs, state authority and the future of immigration enforcement in America.