I was just reading about a violation of the Canadian fisheries act that has a maximum penalty of $200k, and realized the absurdity of there ever being a maximum fine.
There should be no maximum fine on any corporate penalty given that we do not cap the size of corporations or their bank accounts.
It would be like having maximum jail terms of 25 years for immortal beings that can live to 10,000.
Yeah; we very obvious need to move to gross-revenue-based fines. Megacorps can effectively ignore dollar-value fines, since even the maximal amounts are so relatively minuscule that they’re simply seen and handled as an OpEx line item, so there’s effectively zero deterrence factor.
Same argument holds for individuals, there are many violations that are capped there too (at least in my country)
Corporate fines should be in % of the company income.
I would also argue that personal fines should be like that too.
All fines should be a percentage of income. Otherwise we have what we call a poor tax on people who can’t afford it, and “the price of doing business” for people who can. And I’m not referring to just companies.
A friend shared a memory of his drug dealer dad, when they were in vegas, lost a ton of money gambling and flipped the fuck out. Started smashing vases.
Security approached. He threw hundred dollar bills at them. They started handing him more vases.
It has to be worth, not just income. There’s too many loopholes around “I don’t have income I just have stock I use as collateral for a loan” or “I don’t have income but my LLC happens to pay for all of my daily expenses”.
But yes, all fines need to scale with the perpetrator. The more dollars you have, the less each dollar means.
A $100 ticket for parking on a crosswalk means nothing to a millionaire, but is potentially ruinous for someone living in poverty. It needs to hurt the same for everyone. The millionaire should have to pay hundreds of thousands of dollars. They need to feel pain.
A lot of people are really shitty and operate at a very basic level of moral reasoning. It’s just “did I get punished?”.
I don’t have income but my LLC happens to pay for all of my daily expenses
That’s income. Not according to tax laws, but that’s also why we shouldn’t base monetary penalties on tax law. These fuckers have been exploiting the loopholes to have the most money and power and also pay almost nothing. But they still eat! And grocery stores don’t accept leveraged loans, securities, Bitcoin, or percentages of annuities… At some point, they touch money. So let’s tax (and penalize) them so they can’t avoid paying their fair share.
Good luck getting that to happen anywhere but Scandinavian countires.
We Bad a millionaire jerk in germany that printed bis own license plate so he didnt need to drill holes in bis Porsche. The fee was 30000€ iirc. Because traffic fees are mostly income based here
Steve Jobs would exploit a California loophole that says new cars didn’t require a license plate, so he would lease a new car every 6 months to avoid license plates.
Not income, global revenue of the parent company, like GDPR does it
So if Google fucks up, it’s the full revenue of Alphabet Inc that determines the fine.
That way you can’t found GDPR Violation Incorporated and do your shady stuff there risk free.
Has anyone actually got hit with big gdpr fines?
Meanwhile, Google is illegally chopping down a forest to make space for a data centre. Those fines should be proportional to revenue too. That would teach them not to mess around with trees.
trees are different. malicious removal of them for profits is even worse. the fine should also be recurring, and paid-in-full annually until that forest is restored to its former condition.
Operate fines should be a % of income + the amount of illegal gains. Most times the fines today are much lower than the amount of profit they make from committing the crimw
*Networth
You fuck up badly, better be ready to liquidate some assets.
Hmm. That’s a very good point. And if corporations are “people”, they should be the only people subjected to capital punishment.
Cause serious enough harm? Fuck you, you’re ALL getting fired. Or at least everyone in management; the ones who actually do the work rarely have any agency in the situation, so yeah maybe don’t punish them. At least minimize harm, maybe nationalize resources and break it up.
Isn’t that what European laws are now doing?
Some (too few) laws have such fines. One example is the European Union’s Digital Services Act which states: Fines up to 1% of the worldwide annual turnover can be imposed.
Fines for natural persons based on income and wealth are rare, but exist. Finland and its traffic violations is one example. The story is that happiness was great when a senior executive of Nokia was caught for such a violation some years ago whe n Nokia was still relevant.
Corporations aren’t moral agents, and therefore a fine against a corporation should be intended to compensate for the illicit harm done (adjusted by the probability of getting caught). The compensation necessary does not depend on how much money the corporation has available. In other words, it’s like a “you break it, you buy it” policy - you charge as much as the broken thing costs, regardless of how much money the person who broke it happens to have.
Edit: here’s another way of thinking about it. A corporation’s motivation to break a rule is equal to (expected_profit - fine * chance_of_getting_caught). You want that motivation to be less than the harm breaking the rule does. The size of the corporation isn’t a variable in the equation.
Okay, but then what purpose does a cap serve? The amount of harm doesn’t have a cap, why should the fine?
Caps make sense in some circumstances (like how a library’s overdue book fine caps at the price of replacing the book). I don’t know anything about the Canadian fisheries act and whether its cap is reasonable, but a reasonable cap (if there is one) generally shouldn’t have anything to do with the size of the corporation, unlike what OP proposes.
So this comment is just off-topic? The OP is about caps, and whether they are reasonable.
The OP is proposing that a fine (whether or not it is capped) should have some relation to the size of the corporation being fined, and I’m saying why that’s wrong.
No, the OP is proposing there shouldn’t be a cap. There’s no “whether or not it is capped” proposed, the OP just opposes caps.
The OP is proposing that there shouldn’t be a cap specifically because we don’t cap the size of corporations.
That doesn’t require that the size of the fine scales to the size of the corporation. The size of the fine could also scale to the size of the harm. A cap means that a company can inflict trillions of dollars of harm but only pay the fine up to the capped amount. That will usually lead to larger companies paying larger fines because they inflict larger harms, but not always.
But you just don’t want to engage with the topic of caps at all.
But the size of the profit will also scale with the size of the company. A small company will have less to invest so the absolute money value they’ll take in profit will be less than a huge company. A larger company with more money behind it will have a higher monetary risk threshold too, so the fine needs to reflect that.
Doing the fine by the value of the company isn’t perfect, but it is much easier to calculate than trying to determine how much they expected to make.
You don’t need to know the profit - it’s the corporation’s job to estimate that before making a decision. You just need to know the cost of the harm done and the chance that a violator will be caught and fined.
To disencentvise the behaviour you’d need to make sure that the fine was several times the profit. So what happens when the fine is larger than the company can pay? Prison time for the biggest share / ownersholders? Fining those people and companies also?
So, cause they’re a made up fucking concept they don’t have to take responsibility for their actions???
That’s… dumb.
You’ve contradicted yourself in this very comment.
First you claim that fines are just recoup the cost to society, then you claim that they’re a deterrent for bad behaviour.
Honestly, how do you not see that 0.5% of revenue and 50% of revenue, are two very different deterrents in the views of a corporation? I feel like your being willfully blind here. Corporation are run by humans who are moral actors, and regardless, they are motivated by protecting their profits, in which case maximum caps signal that they can behave however they want, as long as they can afford to pay the penalty.
I never said that corporate fines are a deterrent for bad behavior. Recouping the cost to society should be the sole motivation for the fines. If the cost of the fine is less than the cost of compliance but more than the cost of the harm done, then corporations should break the rule and pay the fine. Everyone is, in expectation, better off that way.
Did you make this comment before your edit? Because that’s literally what you said in the edit.
Edit: here’s another way of thinking about it. A corporation’s motivation to break a rule is equal to (expected_profit - fine * chance_of_getting_caught). You want that motivation to be less than the harm breaking the rule does.
There’s no contradiction. You want the motivation to be less than the harm breaking the rule does, not because you want to deter the corporation from ever breaking the rule but because if that condition is satisfied then society is actually better off if the corporation does break the rule (and pay the fine). Let’s say you have a rule against dumping toxic waste. You decide that having one less gallon of toxic waste dumped is worth $1,000 to you. If the corporation can make a profit of more than $1,000 per gallon by dumping the waste, it dumps the waste, you get paid, and both sides benefit.
This is such strange logic. No. You want the company to not break the rule, otherwise it’s not a rule. Therefore the fine should be to a point where breaking it would be so determental to their business that they do everything to not break it.
Its like after gdpr came in a lot of shady USAian companies simply geoblocked European IP addresses as they knew the potential fines were so massive
Bud this is asinine, you need to go outside and give your head a shake.
Your whole argument is based on the naiive idea that everything has a clear cut nominal cost that can be easily measured.
The reality is that things like environmental destruction and abuses of labour, have costs and impacts that ripple across generations with uncountable numbers of secondary effects. When toxic waste is dumped and it causes family members to get cancer that requires not only treating the actual patients, but all the time suffering, and waste to all of their friends and family members, and all of the environmental remediation that can never actually be completed.
Not everything is reversible or fixable.
You need to grow up and stop relying on simple cost models to explain everything. Corporate fines are not tolls that are expected to be paid. They are punishments for breaking the law and are there to deter corporations from doing so.
it’s like a “you break it, you buy it” policy - you charge as much as the broken thing costs
So if the thing they broke can never be whole again, we take infinite value out of the company? Leave all the shareholders with nothing, seize their personal assets, and put their pictures on a big “WALL OF SHAME - DO NOT SERVE” mural? I could get behind this.
The cost of the violation is determined in advance, and should be proportional to how much it would cost to pay people to accept the risk of harm, not how much it would cost to undo the harm. People are usually quite willing to accept a small risks of harm even if that harm can’t be undone. For example, currently US government policy generally values the life of an American at (IIRC) about eight million dollars, which corresponds to the average American being willing to take a one in a million chance of dying for eight dollars. Someone who takes that bet gets eight dollars even if he’s the unlucky one who dies.
Fine should be the cost to repair the damage plus a percentage of net worth as a penalty.
Now we open the can of worms to calculate damage for environmental and medical expenses against the propaganda, lobbying, legal and “expert” opinion of giant corporate groups having legal funds larger than some national budgets, and more “speech” aka money that you. But it is a start I guess.
