Graduating Economic Sanctions According to Ability to Pay

Abstract

There is growing recognition that economic sanctions — fines, surcharges, fees, and restitution — are routinely imposed at rates many people have no meaningful ability to pay, which can exacerbate financial instability and lead to the perception that economic sanctions are unfairly punitive to people of limited means. Concerns triggered primarily by highly punitive tactics, including incarceration and long-term probation of low-income debtors for the failure to pay, have led to increasing calls for reform. While much attention is now being paid to the back-end of the system, and particularly limitations on punitive responses for the failure to pay due to poverty, this Article considers the problem from the front-end. In particular, this Article focuses on a potential reform with increasing bipartisan support: the graduation of economic sanctions according to a person’s financial circumstances.

To that end, this Article explores several key considerations essential to designing a system of graduation, relying heavily on a largely-forgotten experiment in seven geographically, demographically, and politically diverse jurisdictions in the United States with the “day-fine.” A day-fine is calculated using a penalty unit assigned based on the seriousness of the offense of conviction. The penalty unit is then multiplied by the defendant’s adjusted daily income to determine the day-fine amount. The result is an economic sanction adjusted to offense seriousness and simultaneously graduated to the defendant’s financial condition. This Article mines the historical record of the American day-fines experiments — complemented by recent interviews with people involved in the design and implementation of the projects and experiences with means-adjustment in the consumer bankruptcy, tax, and public benefits contexts — for lessons on the design of graduating economic sanctions. What emerges from this review is promising evidence that a properly designed and implemented system for graduation is consistent with efficient court administration, revenue generation, and equality in sentencing.

Keywords: Fines, Fees, Restitution, Punishment, Poverty, Equality

JEL Classification: K14