Ebel, Robert D

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Georgia State University ScholarWorks @ Georgia State University ICEPP Working Papers International Center for Public Policy 7-1-2018 Fees and Fines: An Economist's View of Who Should Pay Robert D. Ebel Yale Law School, Rebel@robertebel.com Follow this and additional works at: https://scholarworks.gsu.edu/icepp Recommended Citation Ebel, Robert D., "Fees and Fines: An Economist's View of Who Should Pay" (2018). ICEPP Working Papers. 159. https://scholarworks.gsu.edu/icepp/159 This Article is brought to you for free and open access by the International Center for Public Policy at ScholarWorks @ Georgia State University. It has been accepted for inclusion in ICEPP Working Papers by an authorized administrator of ScholarWorks @ Georgia State University. For more information, please contact scholarworks@gsu.edu.    International Center for Public Policy International Center for Public Policy Working Paper 18-15 July 2018 Fees and Fines:   An Economist’s View of Who Should Pay            Robert D. Ebel        International Center for Public Policy                                                             International Center for Public Policy Working Paper 18-15 Fees and Fines:   An Economist’s View of Who Should Pay          Robert D. Ebel    July 2018  International Center for Public Policy Andrew Young School of Policy Studies Georgia State University Atlanta, Georgia 30303 United States of America Phone: (404) 413-0235 Fax: (404) 651-4449 Email: paulbenson@gsu.edu Internet: http://icepp.gsu.edu/ Copyright 2018, the Andrew Young School of Policy Studies, Georgia State University. No part of the material protected by this copyright notice may be reproduced or utilized in any form or by any means without prior written permission from the copyright owner.                  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This reputation has been built serving a diverse client base, including the World Bank, the U.S. Agency for International Development (USAID), the United Nations Development Programme (UNDP), finance ministries, government organizations, legislative bodies and private sector institutions. The success of the International Center for Public Policy reflects the breadth and depth of the in-house technical expertise that the International Center for Public Policy can draw upon. The Andrew Young School's faculty are leading experts in economics and public policy and have authored books, published in major academic and technical journals, and have extensive experience in designing and implementing technical assistance and training programs. Andrew Young School faculty have been active in policy reform in over 40 countries around the world. Our technical assistance strategy is not to merely provide technical prescriptions for policy reform, but to engage in a collaborative effort with the host government and donor agency to identify and analyze the issues at hand, arrive at policy solutions and implement reforms. The International Center for Public Policy specializes in four broad policy areas:  Fiscal policy, including tax reforms, public expenditure reviews, tax administration reform  Fiscal decentralization, including fiscal decentralization reforms, design of intergovernmental transfer systems, urban government finance  Budgeting and fiscal management, including local government budgeting, performance-based budgeting, capital budgeting, multi-year budgeting  Economic analysis and revenue forecasting, including micro-simulation, time series forecasting, For more information about our technical assistance activities and training programs, please visit our website at https://icepp.gsu.edu or contact us by email at paulbenson@gsu.edu.      Proceedings of the Liman Colloquium      Yale Law School Contact: Rebel@robertebel.com   Fees and Fines:   An Economist’s View of Who Should Pay  Robert D. Ebel  July 12, 2018   Introduction   In Bearden v. Georgia (1983), the US Supreme Court found that an indigent defendant cannot be jailed for an inability to pay a fee or fine unless the defendant has “has willfully refused to pay the fine or restitution when he has the resources to pay or has failed to make …efforts to seek employment or borrow money to pay….”    However, the Court stopped short of giving clear guidance on the meaning of either ability or willingness to pay (Edelman, 2017). The US Constitution is explicit that that once a person is convicted of a crime the fines imposed shall not be excessive.    Yet, as documented in these Proceedings, in practice things can go badly. It is not uncommon for a state/ local (herein after “state”) court to impose a combination of charges that range from fees to access to the courts to fees plus fines that   cause a low income defendant to lose employment and be forced into a lifetime of poverty for themselves and their family.  A national alert about how  fines and fees  punish the poor  gained nationwide attention   following the Ferguson, Missouri police shooting of Michael Brown where   the US Department of   Justice found   that   that the City’s emphasis on revenue generation had a “profound effect” on FPDs  approach to law enforcement (DoJ, 2017) . And, as these Proceedings and other recent examinations of the trends in state courts further reveal, Ferguson is not an isolated example.  Furthermore, the matter of levying fees largely for revenue purposes is a state issue:  no fees are imposed for access to the federal court system (Smith,   Campbell and Kavanagh, 2017).      (Some) Public Finance Economics  The purpose of this essay is to take a public finance economics view of the topic   “who should pay?” when it comes to the matter of fees that apply to innocent and guilty alike, and the fines assessed for those found guilty.        There are two normatives that apply:  Benefits Received and Ability to Pay.      The Benefits doctrine holds that people should pay for the public services they receive. Taxes and fees are seen as prices paid for public services similar to what the consumer pays for purchasing a private good or service. If the payment is fair—there is a match between “who benefits” and “who pays”—then the system is fair.  It is about “getting the prices right” (Bird, 1976).   Fees. There are two groups that benefit from access to justice, and here the Benefits doctrine comes into play.   The first is clear cut:  the accused. In economics jargon, the benefits of access are internal to the defendant.  The second is those who are not directly involved in a judicial activity, but who nevertheless gain from having a system that is available to all citizens and, too, who want to keep the option open for own use if needed at another time.   Now the benefits flow to external parties—they are shared by all.   This leads to the policy   conclusion   that for a society that declares equality and liberty for all, access to justice not only has important aspects of a pure public good (no one can be excluded), but also, that in getting the prices right, the benefits are so broad that the cost of access should be funded through general taxes, not fees.     Fines. Dating back to Adam Smith (1776), the Ability doctrine calls for people to contribute to the cost of government according to one’s capacity to pay.   Again, things can go terribly awry.    As the essays in these Proceedings document, often a low-income defendant will plead guilty to a charge just to avoid further fines and penalties on unpaid fines and/or end up in the vortex of an often corrupt the bail system.  This   said, it is also important that when a person is convicted of breaking the law, a penalty must be assessed.      Again, the task is about “getting the prices right”.   There are two matters to consider.      The first is that in measuring ability to pay,   it is important is to keep it simple.   Two centuries ago property and wealth revealed   ability to pay; today income is the preferred indicator.  Yes, in concept, ability includes more than current income (e.g., change in net asset worth, plus, even some forms of imputed income), but for purposes of measuring “ability” there is an compliance and administrative  administration case to be made to go with current income. If income is not available, proxies are. Note that income may be zero or even negative.  The second, which is related to the first, is to recognize   that society can achieve a high degree of equity by pegging a penalty to a convicted defendant’s opportunity cost.  An   example is the approach used in several European countries whereby offenders   with different abilities to pay and who commit the same crime   pay the same “day fine”— that is, a similar proportion of their income as distinct from the same   absolute amount of money (Coglan, this volume).  Too, there are non-monetary approaches (which can be monetized) including   community service and/or   some form of restitution.   Finally, on the matter of Bearden’s willingness to pay: it is not a   good working approach. Willingness is a concept that can be used to ascertain how much a user values a public service. This works for finance and funding of infrastructure where there is a market-like exchange among parties, but justice  system fines and fees are a one-way government coercion.   __ Robert D. Ebel is Affiliated Senior Research Associate with the Andrew Young School of Policy Studies,   Georgia State University.  The view expressed are those of the author and not the Andrew Young School.                        References    Bearden vs. Georgia,   461 U.S. 660 (1983)  Bird, Richard M (1976). Charging for Public Services: A New Look at an Old Idea. Toronto,   Canadian Tax Foundation   Ebel, Robert D.  & Yameng Wang (2017). “The Role of User Charges in Funding the Flow of US Infrastructure Services” Chapter 6 in Richard M. Brid and Enid Slack, eds. (2017). Financing Infrastructure: Who Should Pay? .Montreal & Kingston: McGill-Queens University Press.  Edelman, Peter (2017). Not a Crime to Be Poor.  New York: The New Press.   Resnik, Judith and Anna VanCleave, Kristen Bell, Skylar Albertson, Natalia Friedlander, Illyana Green and Michael  Morse, eds. (2018). Who Pays? Fines, Fees, Bail and The Cost of the Courts. Twenty-First Annual Liman Colloquium, Liman Center for Public Interest Law. New Haven: Yale Law School  Smith, Adam (1776).  See Wealth of Nations (New York: Modern Library, 1937)  Smith, Deborah W, and Charles F; Campbell and Blake P. Kavanagh (2017). Trends in State Courts. Williamsburg, VA: National Center for State Courts.   United States Constitution, amend.  Amendment VIII.  United States Department of Justice, Civil Rights Division (2015), Investigation of the Ferguson Police Department. Department of Justice. Washington, DC. 

Fees and Fines: An Economist\u27s View of Who Should Pay

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Fees and Fines: An Economist\u27s View of Who Should Pay

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