Families as the Hidden Tax Base: How Georgia’s Incarceration System Shifts Billions in Costs to Families

Executive Summary

• The total annual cost to families of incarcerated people reaches nearly $350 billion nationwide — almost four times the $89 billion taxpayers spend on jails and prisons. Georgia families face this burden through commissary markups of 67–161%, phone call kickbacks, money transfer fees reaching 45%, and pay-to-stay charges authorized by 48 states.
• Families spend an average of $4,200 per year in direct out-of-pocket costs — more than 27% of income for someone at the federal poverty line. These costs are not voluntary: the state’s failure to provide adequate food, healthcare, and hygiene forces families to subsidize basic necessities through monopoly vendors.
• Black families pay 2.5 times more ($8,005/year) than white families ($3,251/year), compounding racial wealth inequality. Women bear 83% of the financial responsibility for court-related costs.
• Commissary and phone kickbacks flow into opaque “Inmate Welfare Funds” that operate as shadow budgets free from legislative appropriation oversight. In Fulton County, the Board of Commissioners chairman said he had “never heard of” the welfare fund oversight committee.
• Having an incarcerated family member reduces household assets by 64.3% and increases debt by 85.1%, creating intergenerational poverty cycles. Children of incarcerated parents lose an estimated $4,468 per year of adult life in reduced lifetime earnings — totaling $215 billion annually nationwide.

Key Takeaway: Georgia’s incarceration system transfers billions in costs to families — disproportionately women and Black families — through commissary markups, phone kickbacks, and fees that function as a regressive hidden tax while generating shadow revenue streams outside legislative oversight.

Fiscal Impact

The Cost Shift from State to Families

The state’s failure to adequately fund basic services inside prisons does not eliminate costs — it transfers them to families. This cost shift carries measurable fiscal consequences for Georgia taxpayers and the state economy.

Direct extraction from families:
– $5.6 billion annually nationwide on commissary, phone calls, and basic necessities — with markups reaching 600% above retail cost
– $1.8 billion annually on travel for prison visits
– $2.3 billion annually on childcare for children of incarcerated parents
– $6.7 billion annually in lost household income when a loved one is incarcerated
– National commissary revenue alone: estimated $1.6 billion annually
– National telecom revenue from prisons/jails: estimated $1.4 billion annually for phone calls alone, excluding video calls and e-messaging

Shadow revenue streams outside legislative control:
– Commissary kickbacks range from 16% (Kentucky) to 35.6% (Florida DOC’s $175 million Keefe Group contract)
– These kickback revenues flow into “Inmate Welfare Funds” — opaque accounts that function as shadow budgets free from legislative appropriation oversight
– Georgia’s Fulton County Board of Commissioners chairman said he had “never heard of” the welfare fund oversight committee

Downstream costs to taxpayers:
– $111 billion annually in reduced earnings for formerly incarcerated people due to limited job opportunities
– $215 billion annually in reduced lifetime earnings for children of incarcerated parents
– 65% of families unable to meet basic needs because of financial costs of incarceration — increasing reliance on public assistance programs
– 10 million people owe $50 billion in accrued incarceration debt, much of which is uncollectable and creates administrative costs
– Average court-related debt of $13,607 per family — almost one year’s entire annual income for those earning less than $15,000

Reform cost comparison:
– San Francisco eliminated commissary markups; loss of approximately $500,000 annual revenue had “minimal” impact — 0.17% of the Sheriff’s budget
– Dauphin County, Pennsylvania forgave $65.9 million in former detainee debt in September 2024, with the county commissioner noting they were “literally spending money on recidivism reduction programs while keeping individuals from reaching that goal by making it almost impossible to get credit, unable to get a mortgage, unable to rent an apartment, unable to get a car loan”

Key Takeaway: The state shifts billions in incarceration costs to families through commissary markups, phone kickbacks, and fees — while the resulting economic harm to families generates downstream taxpayer costs through increased public assistance needs and $215 billion in lost lifetime earnings for children of incarcerated parents.

Key Findings

1. The $350 Billion Family Tax

FWD.us’s June 2025 national survey of more than 1,600 people with incarcerated family members documented the total annual cost to families at nearly $350 billion — almost four times the $89 billion taxpayers spend on jails and prisons. Direct out-of-pocket spending averages $4,200 per year for people with an immediate family member in prison — more than 27% of income for someone at the federal poverty line.

The peer-reviewed Family Incarceration Costs Survey, published in Science Advances, found that 64% of family-incarcerated person pairs reported incurring at least one direct expense, with a median monthly direct expense of $172/month, representing 6% of household income.

2. Commissary: The Captive Marketplace

Prison commissaries generate an estimated $1.6 billion annually through a captive retail market where incarcerated people have no alternatives. The Appeal’s 9-month investigation collecting commissary prices from 46 states found markups range from 40% to 600% above retail. Average individual commissary spending reaches $947/year across Illinois, Massachusetts, and Washington.

These purchases are necessary because prison wages average a minimum of $0.13/hour for non-industry jobs, with an average maximum of $0.52/hour, and seven states pay nothing at all. Georgia’s commissary shows markups between 67% and 161% on everyday items.

Private vendors pay kickback commissions to corrections agencies: Florida DOC’s $175 million five-year contract with Keefe Group includes a 35.6% commission kickback on marked-up items. Kentucky pays 16% under its Union Supply Group contract.

3. Communications: Families Taxed to Maintain Contact

Total national telecom revenue from prisons/jails reaches an estimated $1.4 billion annually for phone calls alone, excluding video calls and e-messaging. Before partial reforms, families paid as much as $1/minute.

The 2022 Martha Wright-Reed Act gave the FCC authority to regulate rates. In July 2024, the FCC set phone caps of $0.06/minute for prisons and large jails. However, under the 2025 FCC Republican majority, these rules were suspended and replaced with higher interim caps of $0.10/minute for large prisons.

4. Money Transfers: Toll Booth at the Prison Gate

JPay provides money transfers to 1.7 million+ incarcerated people in 32 states — nearly 70% of the U.S. prison population. For 40% of prisoners’ families, JPay is the only option. To send $50, a family pays $6.95 to JPay; fees can reach 35% of the transfer and in some states approach 45%.

Previously, families could mail a money order for approximately $2 total cost. In 2021, the CFPB penalized JPay for violating the Consumer Financial Protection Act — including charging fees to access one’s own money and forcing just-released people in California, Colorado, and Georgia to establish JPay accounts to receive government benefits.

5. Pay-to-Stay and Medical Fees

48 states allow at least one category of pay-to-stay fees; only California and Illinois have repealed fees for all categories. Per diem rates typically range from $20 to $80 per day. In Florida, courts can charge up to $50/day — based on sentence length, not time actually served.

States can seize wages, inheritances, lawsuit settlements, pension funds, veterans benefits, disability benefits, and tax refunds for unpaid fees. Rutgers sociologist Brittany Friedman found 10 million people owed $50 billion in accrued incarceration debt.

40 states and the federal BOP charge medical copays ranging from $2 to $13. A JAMA study (August 2024) found that prison systems with more expensive copays limit access to healthcare for pregnant people and those with chronic conditions.

6. The Gendered Burden

In 63% of cases, family members on the outside were primarily responsible for court-related costs. Of those family members, 83% were women. Mothers of incarcerated people spend a median of $286/month. Spouses and coparents spend $276/month — 12% of household income, the highest of any relationship category.

7. The Racial Wealth Gap Multiplier

Black family members pay 2.5 times more ($8,005/year) than white family members ($3,251/year) to support incarcerated loved ones. Black people are twice as likely to have multiple family members incarcerated. Black families contribute a median of $200/month — 9% of household income — compared to white families’ median of $120/month.

Having an incarcerated family member reduced household assets by 64.3% and increased debt by 85.1%. The Opportunity Insights project found that 21% of Black males born to parents in lowest-income families were incarcerated on April 1, 2010. Children of incarcerated parents lose an average of $4,468 per child per year of adult life in reduced lifetime earnings.

Key Takeaway: Systematic extraction from families operates through five channels — commissary markups, phone kickbacks, money transfer fees, pay-to-stay charges, and medical copays — each generating revenue for private vendors and corrections agencies while deepening poverty for the families who can least afford it.

Comparable States

States That Have Enacted Reforms

Free Communications:
– California, Connecticut, Massachusetts, Minnesota, and Colorado have enacted laws requiring free communications in state prisons and/or jails
– New York City jails adopted free communications
– At least 9 states prohibit commission-based telecom contracts: California, Michigan, Minnesota, Mississippi, Nebraska, New Mexico, New York, Rhode Island, and South Carolina

Commissary Reform:
– San Francisco eliminated commissary markups; the loss of approximately $500,000 in annual revenue had “minimal” impact — 0.17% of the Sheriff’s budget. Results were called “profound”

Pay-to-Stay Repeal:
– Illinois and New Hampshire repealed pay-to-stay laws in 2019
– Missouri repealed in 2025
– Connecticut reformed in 2022
– Only California and Illinois have repealed fees for all categories

Debt Forgiveness:
– Dauphin County, Pennsylvania forgave $65.9 million in former detainee debt in September 2024

Georgia’s Position

• Georgia commissary markups range from 67% to 161% on everyday items, with peanut butter marked up over 70%
• Georgia has not enacted free communications legislation
• Georgia has not repealed pay-to-stay fees
• The CFPB specifically cited Georgia as one of three states where JPay forced just-released people to establish accounts to receive government benefits
• Fulton County’s welfare fund oversight committee has never met, according to the Board of Commissioners chairman who said he had “never heard of the committee”

Key Takeaway: Five states now mandate free prison communications, and multiple states have repealed pay-to-stay fees — Georgia has enacted none of these reforms, while its own commissary markups and welfare fund oversight failures have been specifically documented in national investigations.

Policy Recommendations

1. Mandate Legislative Oversight of Inmate Welfare Funds

Action: Require annual legislative appropriation review and public reporting of all Inmate Welfare Fund revenues and expenditures across Georgia’s state prisons and county jails. Establish mandatory quarterly meetings of welfare fund oversight committees.

Justification: Commissary and phone kickbacks flow into opaque accounts that function as shadow budgets outside legislative oversight. In Fulton County, the Board of Commissioners chairman said he had “never heard of” the oversight committee. These funds are generated from families already spending an average of $4,200/year and should be subject to the same accountability as any public revenue.

2. Cap Commissary Markups and Disclose Pricing

Action: Enact legislation capping commissary markups at a maximum percentage above wholesale cost (e.g., 10–15% to cover reasonable operational costs) and requiring public posting of commissary price lists alongside retail comparison prices.

Justification: Georgia commissary markups range from 67% to 161%. Nationally, markups reach 40% to 600% above retail. Average prison wages are $0.13/hour minimum, making families — not incarcerated people — the actual purchasers. San Francisco’s elimination of commissary markups had “minimal” budget impact of 0.17% of the Sheriff’s budget.

3. Prohibit Commission-Based Telecom Contracts

Action: Join the 9 states that prohibit commission-based contracts for prison communications. Consider legislation requiring free communications in state facilities, following the model of California, Connecticut, Massachusetts, Minnesota, and Colorado.

Justification: Commission/kickback systems create perverse incentives to raise prices, extracting an estimated $1.4 billion annually nationwide from families. The Ella Baker Center found one in three families went into debt to cover phone calls and visitation costs. Family contact reduces recidivism, producing downstream savings.

4. Regulate Money Transfer Fees

Action: Cap money transfer fees at a reasonable percentage (e.g., 5%) and require that incarcerated people have at least two transfer options. Prohibit requiring just-released people to establish private vendor accounts to receive government benefits.

Justification: JPay fees reach 35–45% of transfer amounts. The CFPB specifically cited Georgia as a state where JPay forced just-released people to establish accounts to receive gate money — violating consumer protection law. Previously, families could mail a money order for approximately $2.

5. Repeal or Reform Pay-to-Stay Fees

Action: Repeal pay-to-stay charges or, at minimum, prohibit charging fees based on sentence length rather than time served, cap daily rates, and prohibit seizure of disability benefits, veterans benefits, and tax refunds.

Justification: 48 states authorize at least one category of pay-to-stay fees. Ten million people owe $50 billion in accrued incarceration debt. These fees drive 65% of families into inability to meet basic needs and are functionally uncollectable from impoverished families, generating administrative costs while preventing reentry.

6. Eliminate Medical Copay Barriers

Action: Eliminate or reduce medical copays in Georgia’s state prison system, particularly for chronic conditions, mental health, and pregnancy.

Justification: 40 states charge medical copays ranging from $2 to $13. A 2024 JAMA study found that higher copays limit healthcare access for pregnant people and those with chronic conditions. The National Consumer Law Center found an inverse relationship between copay levels and healthcare utilization. At prison wages of $0.13–$0.52/hour, a $5 copay represents 10–38 hours of work.

7. Commission a Georgia-Specific Family Cost Study

Action: Direct the Georgia Department of Audits or a legislative study committee to quantify the total annual cost borne by Georgia families, including commissary spending, phone costs, transfer fees, travel, childcare, and lost income.

Justification: National data shows the total annual cost to families is nearly $350 billion — almost four times what taxpayers spend. Georgia-specific data would enable evidence-based policymaking and establish a baseline to measure reform impact. The Science Advances researchers note that 6% of household income spent on incarceration costs is likely a floor in Georgia, where prices are higher and institutional meals worse.

Key Takeaway: Seven specific legislative actions — from mandating welfare fund oversight to capping commissary markups and eliminating medical copay barriers — can reduce the regressive family tax while improving public safety outcomes through maintained family contact and successful reentry.

Read the Source Document

Read the full GPS analysis: “Families as the Hidden Tax Base: How the Costs of Incarceration Are Shifted to Families” (PDF)

This analysis draws on 26 primary sources including the FWD.us 2025 national survey (with Duke University and NORC), the Science Advances peer-reviewed Family Incarceration Costs Survey, the Ella Baker Center’s “Who Pays?” study, Prison Policy Initiative’s “Shadow Budgets” research, The Appeal’s 46-state commissary investigation, and Georgia Prisoners’ Speak’s own commissary and food service investigations.

Other Versions

• Public Version: An accessible overview of how incarceration costs are shifted to families, with guidance on what families can do and how to support reform efforts.
• Media Version: Press-ready summary with key statistics, Georgia-specific findings, and expert source citations for journalists covering corrections and economic justice.