I spent a few minutes of DuckDuckGo'ing but couldn't find anything... does anyone know if there's a way to see how/if these fines are actually being paid?
UPDATE: Looks like most fines are paid to the US Treasury. [1][2]
Because penalties for bad behavior shouldn't come out of your tax burden? I dunno if that's what GP meant but it's certainly horrendously unethical enough for me.
Taxes are assessed at a percentage of income. If a fine is deductible, you have lower income, and your taxes are lower, yes. But you paid the government for that right! If your tax rate is 30% and you pay a $1000 fine, you save $300 in taxes. But you paid $1000 for that right!
> If your tax rate is 30% and you pay a $1000 fine, you save $300 in taxes. But you paid $1000 for that right!
What it actually means is that your effective net punishment/fine is $700, irrespective of the headline number. Which matters if the numbers are designed to be impactful.
You’re advocating for having three categories in corporate accounting instead of two: revenue,
costs, and penalties?
Ostensibly the courts would factor in tax benefits to their calculations for punitive damages, under the current system. I don’t believe there are any limits on what punitive damages can account for, beyond “make it hurt”.
Not sure if this is a fine written into law though, which would not be able to easily account for tax differences.
not being an accountant as I understand it in my country fines to the tax ministry are not tax deductible. So if this is the case in other countries there would be some legal precedence for saying "fines for this type of offense are not tax deductible"
It depends. If you're a profitable company and the money comes out of a dividend you were going to pay your owners, it's $700 (and the ultimate cost to the owners is less again). But if you're struggling to pay the bills, or the fine is big enough to threaten your operating cashflow, it's a full $1000 you can't spend on new machinery or whatever.