In Revenue Shortfalls, Don’t Fine the Poor – Tax the Rich

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One afternoon in Georgia, a man lifted a $2 can of beer from a corner store. He was quickly caught, prosecuted, and ordered to wear a $1,000 ankle monitoring device as part of a plea deal – at his own expense. The man, already impoverished, sold his plasma to try and make the minimum payments. When he fell behind, the court jailed him for not being able to afford it.

Cases like this sound like some farcical modern take on a Victor Hugo novel, but the awful reality is that they are all too common. What’s more, they are often directly correlated to state and local authorities’ refusal to raise taxes on their wealthiest residents.

That may sound like a stretch, but a recent report found that over 600 jurisdictions in the United States rely on fees and fines from criminal charges to generate over 10 percent of their revenue. In 200 of those jurisdictions, they account for over 20 percent of revenue. These jurisdictions are overwhelmingly rural, impoverished, and are often under threat of further budget cuts from their state governments. Not so coincidentally, they also tend to be located in states with regressive tax structures that place a higher share of the revenue burden on lower-income residents than their wealthy neighbors.

In most states, cities and local jurisdictions don’t have the legal authority to enact income taxes and must rely heavily on state funding to keep public services up and running. In recent years, many state lawmakers have focused on slashing business and income taxes, leaving local authorities with a budget shortfall and few routes for raising revenue. In that bind, it’s easy to see why the most impoverished jurisdictions turn to fees and fines for revenues. All this does, however is extract money off the backs of residents who already don’t have enough, and perpetuate a cycle of inequality that scares away desperately-needed investment in these communities.

As if relying on criminalizing your own residents isn’t bad enough, the people who bear the brunt of these policy failures are disproportionately low-income people of color. Lower-income residents often cannot afford to pay the fines and fees from misdemeanor criminal charges like traffic tickets, jaywalking, littering, or the pettiest of thefts.

It is common practice in 43 states to jail residents, at their individual expense, who can’t afford minimum payments on their court fees or fines. The average prisoner, however, accrues $13,067 in fines and fees associated with the incarceration – trapping incarcerated individuals in an inescapable cycle of debt since they are typically unable to earn any income in jail.

Essentially, state and local jurisdictions are criminalizing poverty for revenue. Many legislators who could fix this problem don’t understand that. They are used to dealing with people who may be slow in paying bills, but will pay very quickly in response to the threat of being put in jail – and they don’t meet people at their fundraising receptions who have no means to pay a fine.

That’s bad enough in itself, but it’s far more disturbing when juxtaposed with many of these same governments’ refusal to look to the most obvious source of revenue: taxing the rich.

In the 45 states with regressive tax structures, the top 1 percent end up paying the lowest effective tax rate, while the lowest 20 percent of incomes pay 50 percent more. This is both morally and fiscally irresponsible.When cities and states need revenue, they should turn to the residents who have the most resources and are already not contributing their proportional share. Instead, they’re turning to the residents who are already struggling to make ends meet. The vast majority of these fine-happy jurisdictions are trying to plug a financial hole in the most unsustainable and unfair way, when what they really need is to attract outside investment – and investors like me tend to shy away from places where inequality is bad enough that local residents can’t even participate in their own economies.

Addressing the revenue gap by taxing the rich, then, isn’t some ludicrous wealth redistribution. It’s simply a matter of making sure all residents pay their fair share, and jumpstarting flagging rural economies in the process. If state legislatures across the country were willing to step up and enact progressive tax structures that make that happen, jurisdictions wouldn’t have to rely on overcriminalization of their most vulnerable residents to raise the money they need. Fairness begets fairness, and it’s as simple as that.

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