I was recently watching some old episodes of Shark Tank with my roommate when we came across a rather interesting pitch: Fixed, an app designed to automatically contest parking tickets based on procedural irregularities (such as a mistyped license plate number) so that the ticket would be dismissed. In defending the app, the developer argued that it would help the poor escape needless parking tickets, which he argued were part of the “most regressive form of taxation” levied by the government, referring to fines for municipal infractions such as a parking ticket. I thought that claim was rather bold so I decided to investigate it.
It turns out that the developer of the app may have a point. One of the first things I came across was the Justice Department’s report on the Ferguson Police Department in Missouri in the wake of Michael Brown’s death. The report uncovered massive abuse by the police department and local government there of low income African Americans. The police department would target them for minor violations, including parking violations, and fine them exorbitant amounts of money. When they would not be able to pay the fines, the police would fine them even more and eventually arrest them or start implementing other punitive measures. The government was not merely charging a regressive tax here; it was using the low-income citizens of Ferguson as its own piggy bank.
I wanted to know how widespread this problem was, so I decided to keep looking for other sources. I ended up finding another source: a CNBC article that discussed how insurance companies raised premiums for poor people who got speeding tickets far more than they did for wealthy people who also got speeding tickets even though wealthy people were more likely to get speeding tickets. While these premiums went to insurance companies and not the government, it magnified the regression of the ticket fines, making it even harder for poor people to pay.
The most damning source, however, was The Guardian, which wrote about how the extortion of money from the poor in general was a major problem in local governments across the United States. The author of the article wrote how a homeless Michigan woman, Edwina Nowlin, was incarcerated because she could not afford to pay room-and-board charges being levied on her incarcerated 16-year-old son. After she received her paycheck, the government took it and applied it to the cost of her own incarceration, leaving her son’s incarceration costs still unaccounted for.
These problems are not nearly as bad for wealthy Americans, who can typically afford to pay these fines when they accrue. One of the major issues is that municipal violations tend to be unfairly assessed against lower income people and are typically charged at a more or less flat rate across income brackets, making it harder for poor people to pay them since they make up a larger percentage of their pay.
The level to which local governments extort money from the poor is alarming, and it certainly lends credence to the claim that fines from municipal violations are the most regressive form of taxation.