There's Something Foul with Fines: Rethinking Penalties in a World of Economic Disparity

Prohibited by Fine Means Legal for a Fee

Ever wondered why a speeding ticket feels like a mere annoyance to some, but like a financial nightmare to others? Welcome to the world of fines — a system where legality comes with a price tag. This article unravels why fines often miss the mark of justice, exploring their disproportionate impact, the inefficiency of flat-rate penalties, and the glaring loopholes the wealthy exploit. Plus, we'll delve into alternative models that could reshape the way we think about penalties.

Fines are Essentially a Scam

Have you ever seen graffiti claiming that 'Skateboarding is not a crime'? In many places, this is actually a legal truth. Skating in prohibited areas is typically considered an administrative violation, not a criminal act. But the fines for such violations are part of a broader issue affecting justice and equity.

Administrative violations, like ignoring skateboarding bans, jaywalking, or noise disturbances, are offenses not severe enough for criminal sentencing but can result in fines. These fines are part of a broader system designed to enforce rules and regulations through monetary penalties, affecting a wide spectrum of activities deemed non-criminal but still requiring some form of legal control.

Most fines, particularly for administrative violations, are levied at a flat rate. This one-size-fits-all approach fails to account for the varying financial situations of violators. For someone driving a $2 million car, a $200 speeding ticket is insignificant. Conversely, for a person driving a $150 car, the same fine can be a substantial burden. This disparity in impact highlights a fundamental flaw in the justice system: fines, intended as a deterrent, lose their punitive effectiveness for the wealthy while excessively penalizing the poor.

Small Fines Cause Big Trouble

The burden of fines disproportionately falls on low-income individuals. For many, paying even seemingly small fines can be challenging. A study involving 980 residents in Alabama revealed startling figures: 83% sacrificed essentials like food and rent to pay court debt, 50% faced jail for failing to pay, and 44% resorted to payday loans​. This situation not only perpetuates poverty but questions the fairness of a system where financial status determines the extent of punishment​.

The consequence of unpaid fines can be alarmingly severe, leading to incarceration even for those who have committed no crime. This harsh reality not only disrupts the lives of individuals, often threatening their entire existence, but also imposes a significant burden on taxpayers. For instance, certain counties spend $1.17 for every dollar collected from fines, essentially making it a loss-making endeavor.​​ And with approximately 4 million people in the U.S. being arrested for victimless crimes each year, and most states spending between $25,000 to $30,000 per prisoner per year, the horrid costs of incarceration underscore the need for a reevaluation of the practices surrounding the enforcement of fines for non-criminal offenses.

Moreover, in at least 26 states failing to pay certain fines results in mandatory driver's license suspension. This can trigger a domino effect: without a license, many lose their jobs and find it hard to meet financial obligations. One study in New Jersey found that almost 45% of people with suspended licenses lost their jobs, unable to secure new employment while their license remained suspended​.

How the Rich Use Fines to Circumvent the Law

The dynamics of wealth and power often play a critical role in how the law is interpreted and applied, particularly concerning fines. This phenomenon is starkly illustrated by the example of the aristocratic Habsburg family, once at the helm of the Austrian-Hungarian Empire. Following the empire's dissolution, the Austrian Nobility Abolition Act of 1919 stripped them of their noble titles. Despite losing their official status, the Habsburgs continue to be an extraordinarily wealthy dynasty and use their title in international circles, maintaining ties with other European aristocracies.

Karl Habsburg-Lothringen, the grandson of Karl I, the last emperor of Austria, notably resumed using "von Habsburg" in Austria. This act of defiance has led to an ongoing legal dispute. However, the fines associated with violating the Nobility Abolition Act, which amount to 20,000 Austro-Hungarian Crowns (or approximately €290), seem trivial to a multimillionaire. This is evidenced by the continued online presence of his website, karvonhabsburg.at, a subtle yet clear disregard for the legal stipulation. The negligible impact of this fine on Habsburg-Lothringen exemplifies how the wealthy can, in effect, sidestep laws through financial means, turning what should be a deterrent into a minor inconvenience.

This instance with Karl Habsburg-Lothringen is not an isolated one, it exemplifies a broader trend where the ultra-wealthy can render laws irrelevant — sometimes not just for themselves, but for everyone. Consider the example of Algerian businessman Rachid Nekkaz. An outspoken critic of France's burka bans — a law introduced in the country that once colonized Algeria — Nekkaz took a unique approach to protest. He committed to paying all fines incurred by individuals for violating the burka ban. This act effectively neutralized the law's intended deterrent effect. By covering the financial penalties for those who chose to wear burkas, he transformed what was intended to be a punitive measure into a mere bureaucratic formality. Between 2011 and 2016, Nekkaz's actions led to approximately $278,000 being contributed to the French treasury, a sum that, while substantial, did little to reinforce the law's intended impact.

Are Income-Based Fines a Solution?

In contrast to the traditional flat-rate fine system, some countries have adopted an innovative approach to ensure fines are equitable across different income levels. Finland serves as a prime example of this model, where fines are calibrated based on the violator's daily net income. This method aims to ensure that the financial impact of the fine is felt equally, regardless of the individual's wealth.

A notable case in Finland involved one of the country's wealthiest individuals, Andres Wiklöf. When caught driving 32 km/h over the speed limit, he faced a staggering fine of $130,000. This fine was calculated based on his substantial income, reflecting the income-based fine system's attempt to impose a penalty that would be meaningful to someone of his financial status.

However, this income-based approach is not without its complications. This is because the wealthy don't always have a high income. Most filthy-rich individuals have their wealth tied up in assets, investments, or inheritances, rather than in a regular income stream. For instance, an heir to a real estate empire might feel no need to draw a conventional salary attached to a 9-5 job, but still possess considerable wealth. This situation can lead to disparities in how fines impact different segments of society, as the income-based system may not accurately reflect an individual's true financial capability.

On a related note, the distribution of social benefits and subsidies across society often reveals ironic contradictions. In many countries, wealthy individuals receive benefits such as child support payments or umbrella money intended to support economic growth, just like everyone else. But this is just the tip of the iceberg when compared to the substantial cost of government subsidies. Subsidies represent a form of wealth redistribution bottom to top and are therefore largely BS as well, but that's a story for another day. Ironically, however, this situation seldom is highlighted in mainstream discourse, which often focuses more on social benefits for marginalized groups like food stamp recipients or asylum seekers.

Why Not a Net-Worth-Approach to Fines?

In the quest for a fairer system of imposing fines, it's worth considering the limitations of both flat-rate and income-based fines. While many fines, in my view, are a byproduct of excessive regulation and could be eliminated, I understand how there remains a need for some form of financial penalty in certain situations. This brings us to an intriguing alternative: a net-worth approach to fines.

Imagine a system where fines are a percentage of an individual's total net worth. For example, a minor traffic violation could incur a fine of 1% of the violator's net worth. Under such a system, an average person with no property and $3,000 in the bank would pay a $30 fine. In stark contrast, a billionaire like Elon Musk would face a fine in the billions. This approach ensures that the financial impact of the fine is felt equally, regardless of the individual's wealth, addressing the issue of fairness that plagues flat-rate fines.

However, this method is not without its challenges. For those with little to no net worth, 1% of zero is still zero. In such cases, a minimum fine could once again disproportionately impact those who are struggling financially, potentially leading them down a path towards incarceration for non-payment – an outcome we've already established as both unfair and costly. Additionally, accurately assessing an individual's net worth can be complex, especially when considering assets, debts, and other financial obligations.

Therefore, the most equitable solution might involve a more nuanced approach: examining cases individually rather than relying on automated, one-size-fits-all fines. This would require a system capable of assessing each case on its own merits, considering the violator's financial circumstances, ability to pay, and the nature of the violation. Such an approach might demand more resources, but it could lead to a more just and effective fining system, one that balances the need for penalties with the principles of fairness and proportionality.

Big Fines, Bigger Context

Before we conclude our exploration of the world of fines, it's essential to highlight the impact of substantial penalties imposed on large corporations. A prime example is the hefty €1.2 billion fine levied against Meta in May for non-compliance with the European GDPR. Such fines serve as powerful indicators of Europe's commitment to protecting private data and enforcing regulations on even the most formidable tech giants. However, when put into perspective, Meta's fine pales in comparison to its €23 billion turnover in Europe in 2022. Moreover, tech giants such as Facebook, Google, and Amazon, often face criticism for their minimal tax contributions. In this light, the fines they incur can be seen as a partial counterbalance to their otherwise limited financial obligations to the treasury.

This illustrates that the world of fines is far from black and white. While fines can sometimes serve as effective tools for regulation and enforcement, they often fall short in terms of equity and justice. As society continues to evolve, so too must our approach to penalizing wrongdoing. The goal should always be a system that upholds the principles of fairness and proportionality, ensuring that penalties serve their intended purpose without exacerbating existing inequalities.