Currently, 1 out of every 142 people in this country are currently incarcerated. This has a devastating toll on these individuals, their families, and society at large. While these prisoners pay their debt to society for the (sometimes heinous) crimes they committed, they are punished in many ways. One is by the jail sales tax.
What is the jail sales tax? A guy I know is currently in jail. He can’t access his bank account, so, someone must put money from his bank about into his prison account, which allows him to buy things from the prison commissary at inflated prices and make phone calls at exorbitant rates. These are part of the jail sales tax. But, beyond just these high prices, there is a 10% fee for transferring money from the bank account of this fellow, to his prison account. Every dollar he spends in prison costs 10% to spend, with the fee going to jailatm.com (owned by Tech Friends, Inc.), one of many for-profit companies that facilitate prisoners being able to spend their own money within the prison system.
So how do companies like Tech Friends, Inc. get this kind of sweet gig? Companies that provide services like this to prisons bid for the privilege to be granted these monopolies by the government. But, states pick the best bid package, not necessarily the lowest price, which packages often includes a percentage of revenue from these fees, as well as the exorbitant rates they charge to provide call service, etc. In North Carolina in 2017, the total amount of these kickbacks going to government just for prison phone calls was $7.6 million. These companies, and the governments that allow them to provide these services, have no economic incentive to provide competitive rates—there is no competition, it is a government sponsored monopoly. As a result, fees, like a 10% fee merely to put cash in an account that gives you the privilege to buy overpriced goods, exist. Given that our prisons are filled from a relatively low-income population, these are incredibly regressive fees/taxes.
One of these overpriced goods is the use of a phone. Prisoners in North Carolina pay an average of $4.82 for a 15 minute phone call, plus the jail sales tax, the fee to get the money on the prison account in the first place (at our local jail, 10%). It is well established that communication with family while in prison is beneficial, reducing the odds the prisoner will return to incarceration. That reduced recidivism is good for the prisoner, good for the prisoner’s family, but, given that it costs on average more than $31,000 a year to incarcerate someone ($37,712.87 in North Carolina) for a year (not to mention their foregone productivity, etc.), also good for taxpayers.
It used to be even more expensive to make phone calls, until the federal government set caps on prison phone call prices. The federal government should cap these high prices and fees, and help reduce the jail sales tax, or states should somehow allow competition to work its way into this marketplace to allow reason rates for calling.
Posts and comments are solely the opinion of the author and not that of the UNC Tax Center or any other person or entity.