NJ Bill A4077 Taxing Federal Immigration Detention Centers Under Fire
the staff of the Ridgewood blog
Trenton NJ, A fierce constitutional battle is brewing in Trenton after a controversial new bill aimed at for-profit operators of federal immigration detention centers advanced through the state legislature.
The legislation, Bill A4077, passed the Assembly Appropriations Committee along strict party lines. While supporters view the bill as a necessary regulatory and fiscal measure, opponents argue that the proposed tax structure is a thin veil designed to force vital facilities to shut down permanently.
Here is a look at what New Jersey Bill A4077 proposes, the historical Supreme Court precedents it may violate, and why critics say the state is overstepping its constitutional bounds.
What is New Jersey Bill A4077?
Bill A4077 targets the private, for-profit entities contracted by the federal government to run correctional and immigration detention facilities within the state, such as Delaney Hall.
If signed into law, the bill would implement three aggressive financial burdens on operators:
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An 8% tax on correctional services contracts with public entities.
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An annual cost-recovery assessment on facility operators, determined directly by the New Jersey Division of Taxation.
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A 3% correctional services business surtax, levied on top of New Jersey’s existing corporate business tax.
photo Assemblyman Bob Auth (R-Bergen)
The Legal Argument: “The Power to Tax Involves the Power to Destroy”
Assemblyman Bob Auth (R-Bergen) has forcefully spoken out against the legislation, arguing that it fails to meet constitutional standards and invites immediate federal litigation.
Auth points directly to one of the most foundational cases in American history: the 1819 Supreme Court decision in McCulloch v. Maryland.
“The principle that a state government may not tax the federal government was firmly established in 1819 through the Supreme Court’s unanimous decision in McCulloch v. Maryland, and it has been affirmed time and time again. This bill levies an unconstitutional tax. It will inevitably be passed on to the federal government… It is illegal because it is a discriminatory tax.”
— Assemblyman Bob Auth (R-Bergen)
In McCulloch v. Maryland, the Supreme Court ruled unanimously that states cannot tax federal institutions or impede the lawful exercise of federal power. Chief Justice John Marshall famously concluded that “the power to tax involves the power to destroy,” meaning states could effectively eliminate federal operations within their borders simply by making them financially unviable.
Is Bill A4077 a “Discriminatory Tax”?
Legal experts differentiate between legal taxes on government contractors and illegal, discriminatory burdens.
In the 1983 case Washington v. United States, the Supreme Court allowed a state sales tax that applied to federal contractors because an identical tax was already applied to private, non-federal projects. The tax didn’t single out the federal government.
However, Auth argues that New Jersey’s Bill A4077 does the exact opposite:
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It creates a steep financial penalty applied exclusively to contractors doing business with the federal government.
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By targeting immigration detention operations specifically, the state places an isolated burden on federal law enforcement efforts.
Critics warn that by making operational costs completely prohibitive, New Jersey is attempting an end-run around federal immigration authority—effectively seeking to close the very facilities that house the vast majority of local undocumented detainees.
As the bill advances toward a full vote, it remains to be seen whether state lawmakers will heed these constitutional warnings or risk a lengthy, costly legal showdown with federal authorities in court.
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