

Should Fines be Wealth-dependent? - cwan
http://gregmankiw.blogspot.com/2010/01/optimal-fines-as-pigovian-taxes.html

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DanielStraight
I think wealth dependent fines are a good idea in some cases, but not for the
same reason as the author. To me, it has nothing to do with tempering fines or
accounting for error. It has to do with the simple fact that $100 means vastly
different things to different people. For someone living in real poverty, $100
could change their life. For the average American, it's a nice chunk of change
but certainly nothing life-altering. For the rich, it's pocket change. $100 to
someone with a net worth of $20m is like 50 cents to someone with a net worth
of $100k. If you got a traffic ticket and it was for 50 cents, would that
constitute any deterrent at all? It certainly wouldn't for me. If I knew the
fine was only going to be 50 cents, I would probably drive _at least_ 35 mph
over the limit in some places. A constant amount of money does not mean a
constant fine. Charging a sufficiently rich person with a $100 fine is as good
as not charging any fine at all. A constant percent of net worth comes much
closer to being a real constant fine.

