| Finding ways to tax Americans without their being | | | | major penalties imposed by agencies such as the |
| aware of it seems to be the name of the game for | | | | SEC, FCC, etc. For example, in 2004, Time Warner |
| politicians and bureaucrats, and generally what should | | | | agreed to a settlement with the Securities and |
| be readily transparent to taxpayers is deliberately | | | | Exchange Commission (SEC) that included a $750 |
| obscured. | | | | million fine. And, in 1995 the international accounting firm |
| For example, we usually don’t think of the fines that | | | | KPMG agreed to pay a $456 million fine to the SEC in |
| are generated by our local police or sheriff’s | | | | a case that involved tax shelter investments. |
| department for traffic and other infractions as taxes - | | | | When an agency takes in a fine amounting to |
| or, city and county fines for violations of building codes, | | | | hundreds of millions of dollars, the money disappears |
| or OSHA fines for workplace safety violations, or FCC | | | | into the black hole of government accounting, and no |
| fines for inappropriate radio and TV programming. | | | | one ever seems to ask what happened to it. |
| Many of these fines can be exceedingly harsh, | | | | The explanation usually given is that these fines are |
| especially for small businesses or non-profits, many of | | | | levied to recover the costs of investigation and |
| which have a hard time staying afloat. | | | | enforcement incurred by the agency involved. |
| Just about every government agency levies some | | | | However, funding of government agencies does not |
| sort of fines for infractions of various rules. And, | | | | appear to be reduced by the fines and penalties it |
| although estimates of potential revenue from these | | | | collects in excess of those amounts that may be built |
| sources are included in the annual budgets of most | | | | into their budgets. If that’s the case and the |
| government agencies, they are really just another | | | | investigating agency recovers more than the amount |
| form of stealth taxation. As far as I know, other than | | | | of revenue budgeted from this source, why isn’t |
| city councils, county boards of supervisors and the like, | | | | their funding reduced accordingly? |
| not one citizen of any community ever has the | | | | If you think about it, fines and penalties are actually |
| opportunity to vote on them. | | | | another form of stealth taxation: first the public is |
| Property has often been confiscated and sold, even | | | | taxed to fund the operation of an agency, law |
| though the owner was not involved in anything criminal, | | | | enforcement, regulatory, etc. And, when revenue from |
| and they did not have to be accused or charged with | | | | fines exceeds budgeted amounts, instead of using the |
| a crime. The police have been able to go to court and, | | | | excess to offset operating expenses, the money is |
| without a trial, obtain a court order to confiscate and | | | | used for some other purpose. At the very least, the |
| sell the property of someone who was suspected of | | | | public pays the cost again by virtue of the fines that |
| a drug crime. The mere fact that the property was | | | | are not applied to help cover the costs of funding the |
| involved in some way has been sufficient. The theory | | | | agencies involved by a like amount. |
| that makes this possible is based on “a technicality | | | | Another interesting fact is that fines and penalties are |
| in the law that allows the government to claim that it is | | | | not tax deductible. When violators, corporate or |
| suing only the item of property, not the property’s | | | | individual, pay their income taxes, in effect they pay |
| owner.” | | | | additional taxes on the amount of the penalty that has |
| Even if that’s justice, what happens to the money? | | | | been imposed because it cannot be included as part |
| Between 1991 and 1995, Federal confiscation of | | | | of the cost of doing business. Thus, a $450 million |
| property under the forfeiture laws increased by 1500 | | | | corporate fine could actually amount to something on |
| percent, to a total of $644 million. And, seizure of | | | | the order of $600 million ($450 million plus $150 million |
| property by state and local governments also | | | | tax). |
| amounted to hundreds of millions of dollars. | | | | When it comes to finding ways to fleece taxpayers |
| But the amount of money that’s generated by | | | | without their even being aware of it, politicians and |
| forfeiture laws is only a small part of the total funds | | | | bureaucrats are usually found at the head of the class. |
| received by government from fines and penalties, | | | | But, that’s just my opinion. |
| ranging from the lowly citation for illegal parking to | | | | ©2008 Harris R. |