A Lesson in Proportionality

The BBC headline is a laugh riot:

Finland: Speeding millionaire gets 54,000-euro fine

For those of you who aren’t up on your euro to dollars conversion, that would be a fine of $58,554.90.  Nuts?

Finland’s speeding fines are linked to income, with penalties calculated on daily earnings, meaning high earners get hit with bigger penalties for breaking the law. So, when businessman Reima Kuisla was caught doing 103km/h (64mph) in an area where the speed limit is 80km/h (50mph), authorities turned to his 2013 tax return.

The real issue here is whether penalties, like taxes, should be progressive or regressive, and the question takes on particular significance following the disclosures of punitive fines in Ferguson.  A fine of a few hundred dollars is chump change to a guy who can whip out his wallet and pay it, but it’s a king’s ransom to someone living hand to mouth. Or worse.

There’s little sympathy from his fellow Finns on social media. “If you follow the rules you won’t have to pay fines,” says one user commenting on the Iltalehti website. “He should stop complaining and hang his head in shame instead”. Another person says: “Small fines won’t deter the rich – fines have to ‘bite’ everyone the same way.”

Put in other terms, losing a day’s pay for a minimum wage earner may be devastating to him, but won’t cause a wealthy person to break a sweat.  Shouldn’t the pain of punishment be the same?  Shouldn’t fines “bite everyone the same way”?

The flip side of the argument is that a successful person shouldn’t be penalized for being successful.  If the amount of a fine for a particular act, say driving 14 miles per hour over the speed limit, is determined to be $100, then that’s what it should be.  Why levy an astronomically high fine on a person to penalize him for having had financial success unrelated to the offense?  Does he get to drive faster because he works harder? Does he get to drive faster because he studied in college while others did not?

As much as a fine for driving 14 miles per hour over the speed limit will be, at minimum, shocking to most, it’s what progressive punishment demands.  After all, the driver may not be happy about any fine, but certainly won’t feel the pain of a $100 fine that is felt by those lacking his income.  And isn’t it fair that the same pain be felt by all?

Even at Jalopnik, where one might suspect the issue of speeding fines to be particularly sensitive, the notion of progressive fines was surprisingly well-received.

But when you start looking into how Finland prices its speeding tickets, it starts to make more sense. Unlike the US, where there’s flat rates for violations like speeding, based on the speed and location and all that, in Finland the fee is based on a percentage of your daily income, which they compute from your previous year’s tax return. The speeder, Reima Kuisla, is a businessman who earned over $7 million dollars last year. Sixty grand isn’t going to kill him, but it will sting, at least a little bit.

So are we doing it wrong here?  By “pricing” fines in absolute amounts based upon the offense, so anyone caught speeding pays the same amount, are we being unfair to the poor and unjustifiably generous to the wealthy?

Just because someone is wealthy doesn’t mean they can break the law with relative impunity.  Then again, just because someone is wealthy doesn’t mean they should be punished disproportionately to the offense.

There is no right or wrong answer, but rather a choice between progressive and regressive penalties.  As much as we’re used to regressive fines in the United States, it’s this approach that has wreaked havoc with so many lives of the poor in Ferguson.  Have we been doing it all wrong?

27 thoughts on “A Lesson in Proportionality

  1. Charles Platt

    I do not believe the police in Finland are conscientiously motivated to adjust the pain felt by lawbreakers to a uniform, median level. If that were their goal, fines for people who have financial difficulties should go down, while fines for the rich go up. More likely, the cops have just found a new excuse to grab as much money as they can get, while creating as little backlash as possible.

    1. SHG Post author

      I do not believe in the tooth fairy. As for how fines are levied in Finland, it’s not a matter of belief. It is what it is.

      1. Rendall

        “More likely, the cops have just found a new excuse to grab as much money as they can get, while creating as little backlash as possible.”

        The relationship of police and government to the rest of society in Finland is radically different than it is in the US. Police and government policy are trusted to, and largely do, serve the public interest. Fines and such are fully for deterrence, not revenue. Curiously, I pay fewer taxes here in Finland than I did in New York City, after both the Feds and the City got their cut, for a similar income.

        1. SHG Post author

          Words I never anticipated saying: Thanks for the info about Finland. Then again, I’ll be in Helsinki in a few weeks, and I never thought that would happen either.

      2. Lurker

        The danger of fines being used for revenue is recognised in Finland. There are institutional ways to decrease the risk. First, the Finnish police is national, so local concerns don’t affect its funding. Second, the fines are paid, via direct deposit, to the institution corresponding “department of corrections” which serves under the Ministry of Justice, while the Police is under the Ministry of Interior. Third, the Ministry of Treasury doesn’t consider the fines as income when making a budget proposal.

        The day-fine system is surprisingly old, dating from 1921. It is used for almost all crimes punishable with fines. However, it only acquired serious teeth in late 90’s when the police patrols got a real-time access to tax data. Before that, the police asked the offender to state their profession and income. As long as the stated income was somewhat in line with the appearance and profession of the offender, the answer was accepted. Lying about the income was not prosecuted and it was, in fact, not even criminal.

        Now the only time when such discussion is held is when the offender claims that the latest tax information is irrepresentative, including random income. In such case, the day-fine may be adjusted for a longer time average income, but since late 1990’s, lying about the income is a crime, punishable with a fine or no more than three months in prison.

  2. Patrick Maupin

    “He should stop complaining and hang his head in shame instead” makes it sound as if Mr. Kuisla is doing a lot of public whining. If so, that may not be quite as quixotic as the campaign Ms. Richards is waging — we have several examples here of people who get richer by constantly reminding everyone they are rich.

    Hmm, now you have me thinking about all those studies where people who are “rich” during the playing of games become assholes. Maybe it’s because they know that a $100 fine for speeding (or whatever) just doesn’t affect them. (Of course, a $58K fine won’t really affect them, either, other than perhaps getting their attention about how they don’t want to collect too many of those.)

    There is no question that setting fines according to ability to pay is not a free market solution. But where, other than to hard-core anarcho-libertarians, is it written that criminal deterrence should be rooted in free market principles?

    FWIW, some commentators view this so-called “day fine” as a viable alternative to incarceration, and I can see some sense to that. Apparently they take half of what has been calculated as your disposable income, and multiply that by the number of days that is proportional to your crime, and, at least in Sweden (not that you care about that, but it is close to Finland, just sayin’) they don’t even disclose the dollar amount of the fine, just the number of days.

  3. Jake DiMare

    I’ve felt compelled to read more and comment less but today I have a thought:

    Aren’t fines associated with public safety issues meant to be a deterrent? If yes, then the argument can be made there IS a right and wrong answer. The right one being that which is better at deterring the crime, regardless of income. Of course, this is based on the assumption we agree that the preservation of safety on the roads is a good thing…

      1. Patrick Maupin

        Obviously, $100 is not much of a deterrence to a guy who makes $7 million a year. Heck, even for me, the speeding fine is nowhere near as irksome as all the administrative burdens that come along with it.

          1. Lurker

            As an interesting aside, Kuisla never needed to go anywhere. The traffic fines are ordered in a summary proceeding. The cop on the road determines the appropriate number of day-fines based on a national manual, ehich gives the policeman a leeway of two to four days to take the circumstances into account. The monetary value of fine is calculated on the spot by requesting the tax information from a national database. The offender receives a citation which includes a direct deposit form.

            From the policeman, the “request for punishment” goes to DA, who issues a “order of punishment” which cannot be larger than the request. The case ends there, unless the offender contests hiis guilt or the DA wants a more severe punishment. Only then, it goes to court.

  4. Chadtech

    I wonder if Finlands policy is a motivating force to ticket rich people disproportionately. It might be a days income to the speeder, but not to the police.

  5. EH

    This has happened before. Back in 2002, the president of Nokia got fined $103,600.

    Proportional fines are appropriate when the purpose of the fine exists solely to provide a disincentive (like “don’t speed.”) After all, there are no costs from an individual speeding who doesn’t otherwise cause harm–we just don’t want people doing it. Only proportional fines will give the right disincentives.

    Proportional fines are less justified when the fine is partly designed to compensate for some identifiable harm. The more that the fine actually matches a definable harm, the less sense proportionality makes: “restitution of government costs” should be a non-proportional number. For speeding, though they seem OK.

    1. Lurker

      In Finland, fine always goes to the state. If the victim has suffered harm, the prosecutor will, in the trial, request restitution for them or the victim can pursue a restitution claim during the criminal trial on their own. Typically, Finnish “criminal lawyers” have a practice where they represent both defendants and plaintiffs in criminal cases. Very few can afford practising only one side. (The DAs are career civil servants who will, most likely, work as DAs until retirement.)

      The restituitions are quite low in Finland because the legal maxim here is “Damages shall not enrich the plaintiff.” The court will, therefore, always err to a lower restitution than the actual damage.

    2. Chadtech

      How is it that only proportional fines give the ‘right’ disincentives? If the goal was to reduce speeding by 30%, and a $100 fine did so, whats the problem?

      For some reason you have determined that everyone must scale back their speeding to the same extent, and you dont actually justify that.

  6. Turk

    The thing that jumped out at me the quickest in reading the story was that it meant the police and other public officials would have easy access to my tax returns, thereby expanding the potential public dissemination of protected information.

      1. Rendall

        In Finland, everyone’s tax information is publicly available, so *everyone* has access to your income amount.

  7. David M.

    It is nuts. At a dollar and eight cents to the euro, importing Arm & Hammer toothpaste is becoming prohibitively expensive.

  8. anonymouse

    Not sure how regressive penalties have negatively affected Ferguson’s poor as much as ignorance, racism, and contempt, but progressive penalties are , like progressive income tax schemes, more fair and reasonable than the alternative.

  9. Bartleby the Scrivener

    I’m not a big fan of this sort of thing.

    If one follows the logic of these penalties, jail and prison sentences should be greater for young people than people of greater maturity, because a typical 19 year old person has far more years left (temporal resources instead of financial resources) than does a typical 45 year old person, so the ‘bite’ would differ rather greatly. If one’s sentence is for community service, do people who provide more expensive services have to serve fewer hours (assuming they don’t make much, but *could* if they wanted to)?

      1. Bartleby the Scrivener

        It’s a matter of the scale of punishment against the resources of the person being punished. Imprisonment is the confiscation of the resource of time and mobility (among other things). Those resources are greater for the youthful.

        1. SHG Post author

          Or the value of a day to a person who has much to do versus the value to a person who has little to do. There are many factors that could enter into the analysis.

  10. Dragoness Eclectic

    Another comment thread which made me less stupid. It’s always helpful to be reminded that “the way we do things in America” is not necessarily the way the entire rest of the world does it, nor is it necessarily the best way to do things. This is why it used to be said that “travel is broadening”, and why I found reading a Cultural Anthropology 101 textbook to be really eye-opening. Study and learn.

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