Graduating Economic Sanctions According to Ability to Pay

• Author: Beth A. Colgan
• Position: Assistant Professor of Law, UCLA School of Law
• Pages: 53-112

53

Graduating Economic Sanctions

According to Ability to Pay

Beth A. Colgan

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

 Assistant Professor of Law, UCLA School of Law. This work was made possible by the

generous support of the Laura and John Arnold Foundation. I wish to thank E. Tendayi Achiume,

Daniel J. Bussel, Gabriel J. Chin, Sharon Dolovich, Kristen Eichensehr, Carissa Byrnes Hessick,

Allison Hoffman, Emily Hughes, Máximo Langer, Kaiponanea Matsumura, Eric Miller, Richard

M. Re, Joanna C. Schwartz, Kirk J. Stark, Patrice Sulton, Jonathan P. Witmer-Rich, Jordan Blair

Woods, and Noah D. Zatz for their insight and comments, and Vincent Beyer, Gianfranco

DeGirolamo, Matthew Delibridge, Jay Factor, Jacob Glicker, Emily Moore, and Michael Romeo

for invaluable research assistance.

54 IOWA LAW REVIEW [Vol. 103:53

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.

I.INTRODUCTION ............................................................................... 54

II.OVERCOMING KEY CONCERNS REGARDING GRADUATION .............. 61

A.CAPTURING AND EMPLOYING VALID FINANCIAL DATA ................. 61

B.MAINTAINING OR IMPROVING FISCAL OUTCOMES ........................ 65

1.Revenue Generation ....................................................... 65

2.Expenditures ................................................................... 69

III.DESIGNING GRADUATION SYSTEMS ................................................. 73

A.ABILITY TO PAY DETERMINATIONS ............................................. 74

1.Avoiding Artificial Inflation ............................................ 78

i.The Oregon Example .................................................... 78

ii.Eliminating Speculation .............................................. 81

iii.Ensuring Flexibility ...................................................... 86

iv.Applying Graduation Broadly ...................................... 88

2.Consideration of Income Sources .................................. 89

i.Family Resources .......................................................... 90

ii.Unreported Income ....................................................... 93

B.STATUTORY MAXIMUM CAPS ..................................................... 96

IV. CONCLUSION ................................................................................ 101

APPENDIX: DAY-FINES PROJECT OVERVIEWS ............................................. 104

A.STATEN ISLAND, NEW YORK ..................................................... 104

B.MARICOPA COUNTY, ARIZONA ................................................. 105

C.BRIDGEPORT, CONNECTICUT .................................................... 106

D.POLK COUNTY, IOWA ............................................................... 107

E.COOS, JOSEPHINE, MALHEUR, AND MARION COUNTIES,

OREGON ................................................................................. 109

F.MILWAUKEE, WISCONSIN ......................................................... 110

G.VENTURA COUNTY, CALIFORNIA ............................................... 111

I. INTRODUCTION

Mounting evidence shows that criminal justice systems are widely

employing myriad forms of economic sanctions—fines, surcharges, fees, and

restitution—often assessing unmanageable sanctions on people who have no

meaningful ability to pay and then imposing further punishment for the

2017] GRADUATING ECONOMIC SANCTIONS 55

failure to do so.1 As the national scope of these practices has come to light,2

an increasing and bipartisan array of constituents have called for a possible

reform: the graduation of economic sanctions according to a defendant’s

ability to pay.3 Graduation would constitute a major shift in jurisdictions

where there is no mechanism to consider a defendant’s financial condition,4

as well as in jurisdictions where judges may consider capacity to pay but are

afforded little guidance on how to do so.5

Neither the problems created by highly punitive practices related to

economic sanctions nor the prospect of graduation according to ability to pay

as a remedy are new. Tariff-fines, which are set at a specified amount or range

for each offense, have long served as the primary form of economic sanction

used in the United States.6 Tariff-fines are inherently regressive, having a

greater effect on the financial condition of a person of limited means than on

a person of wealth.7 Concerns that the use of tariff-fines were unfairly punitive

for people with financial instability, similar to those expressed today,8

garnered attention in the late 1980s when the ripple effect of tough-on-crime

legislation left jurisdictions across the United States with a burgeoning mass

incarceration and mass probation crisis.9 In that landscape, a push began for

the development of intermediate sanctions that would reside between prison

on one end of the punitive spectrum and simple probation on the other.10

Economic sanctions, understood as being “unambiguously punitive,” could

serve that intermediate role. 11 The tariff-fine design, however, contributed to

1. See Beth A. Colgan, The Excessive Fines Clause: Challenging the Modern Debtors’ Prison, 65

UCLA L. REV. nn.1–38 and accompanying text (forthcoming 2018).

2. See infra notes 44–45 and accompanying text.

3. See infra note 46 and accompanying text.

4. See Beth A. Colgan, Reviving the Excessive Fines Clause, 102 CALIF. L. REV. 277, 285–89

(2014) (describing current practices related to the imposition of economic sanctions, including

restrictions on judicial discretion).

5. See, e.g., MO. ANN. STAT. § 558.004(1) (West 2017) (“In determining the amount and

method of payment of a fine, the court shall, insofar as practicable, proportion the fine to the

burden that payment will impose in view of the financial resources of an individual.”).

6. UNITED STATES DEP’T OF JUSTICE, HOW TO USE STRUCTURED FINES (DAY FINES) AS AN

INTERMEDIATE SANCTION 1 (1996), https://www.ncjrs.gov/pdffiles/156242.pdf.

7. See id. (“When tariffs are set at low levels, the fines have little punitive or deterrent effect

on more affluent offenders. When they are set at higher levels, collecting the fine amount from

poor defendants is difficult or impossible, and, in many cases, these defendants are eventually

given jail sentences.”).

8. See SUSAN TURNER & JOAN PETERSILIA, DAY FINES IN FOUR U.S. JURISDICTIONS 1–2 (1996)

(describing judicial concerns about the use of economic sanctions as including the risk of “unduly

penalizing the poor”).

9. Michael Tonry & Mary Lynch, Intermediate Sanctions, 20 CRIME & JUST. 99, 99–100 (1996).

10. TURNER & PETERSILIA, supra note 8, at 1.

11. Douglas C. McDonald, Introduction: The Day Fine As a Means of Expa nding Judges’ Sentencing

Options, in DAY FINES IN AMERICAN COURTS: THE STATEN ISLAND AND MILWAUKEE EXPERIMENTS 1,

1 (Douglas McDonald ed., 1992); see also Judith A. Greene, Structuring Criminal Fines: Making an