Wednesday, December 5, 2007

Driver's Responsibilty Tax - Debtor's Prison

(originally published on on 5 Dec 07.)

If you ever need an example of the evils inherit in big government, just look at the State of Michigan's "Driver's Responsibility Fee." Initially labeled as a tax on bad driving, instead it has turned out to be a tax on poverty, stupidity, and sloth.

It also has forced people onto welfare roles, drug dealing and prostitution as they try to pay staggering tax bills from the Michigan Dept. of Treasury.

Somewhere in the waning days of the GOP-dominated legislature, our legislators tried to come to grips with their budget deficit without cutting spending. Having spent the Tobacco Settlement, and pledged "no new taxes" to voters, they forced to look for new sources of revenue if they wanted to continue their spendthrift ways (free notebook computers to kids?!?!).

In 2003, the Republican Senate leadership borrowed an idea from New Jersey. Sen. Jud Gilbert, R-Algonac, proposed a "drivers responsibility fee" (a TAX) for drivers who had more than 7 points on their license, plus another $50 for each additional point. When the dust settled, some offenses -- drunk driving for instance -- had a $2000 fee, plus the points on the license.

This effort went unnoticed, or perhaps even heralded, since no one wants to see drunk drivers get off lightly. However, it soon became clear that the tax, like the original tax in New Jersey -- where it is called "debtor's prison -- was flawed.

The worst of the problems started when people failed to pay for a ticket, then had their licenses suspended for non-payment after 30 days, then were caught driving on a suspended sentence.

Consider the case of Amy (not her real name) who struggles more than the rest of us. Divorced from an abusive husband, she was once hospitalized for depression. She's trying to raise 3 kids, and even took job training at her local community college.

She could not afford to pay a $65 seat belt ticket, and her license was suspended for failure to pay after 30 days. She was caught driving on a suspended license, and that $65 ticket cost her $690, which was paid by her mother.

Sadly, she thought that her license was reinstated when she paid the $690. A local officer saw her
driving the next week, pulled her over, and informed Amy that it was still suspended from the first series of offenses.

She spent the night in jail, and this round added another $625 to that bill. The $65 ticket now cost her $1,315.

Worse yet, the State of Michigan has a "Driver Responsibility Tax." In Amy's case, the State of Michigan taxes her an additional $1,000 for each of the next 2 years. That $65 ticket now will cost her $3,315.

Even if you have no sympathy for Amy, you should have empathy for your wallet. In Michigan the number one determinant of poverty and unemployment is the lack of access to a car. Amy has lost three jobs because she doesn't have a license. She now lives on welfare, with no hope of paying the remainder of the $3,315 which will reinstate her license.

Amy's case is not at all unique. I've talked with women who resort to turning tricks to pay off their fines, as the Michigan economy prevents "just work harder" solutions. One man owes over $2000 for tickets and Driver's Responsibility taxes for driving without insurance -- he was the designated driver, the vehicle belonged to his drunken friend, and there wasn't insurance on that vehicle. For the record, he's driving illegally, without a license.

The Driver Responsibility Tax is just that -- "taxes", not "fines." Most who are so taxed are people like Amy, who simply couldn't afford to pay a ticket. It's a tax on poverty and sloth, not on bad driving. It's a draconian tax that needs to be consigned to the dustbin of bad ideas.

One party claims to be the party of the "little guy, the poor, the oppressed." The other party claims to be anti-tax, anti-big government, and pro-work. Sadly, both are addicted to the estimated $100 million that will be billed to drivers (some of which don't even live in the USA!) and refuse to fix this situation.

One quick fix would be to change the law so that a license suspended for non-payment of tickets isn't "suspended" in the same way that it's "suspended" for criminal actions. This would eliminate most of the immediate problems. The second step would be to have an appeals process, where people (like Amy) who won't ever be able to pay the money can get a "pardon" of sorts.

Of course, the real fix is to reign in the size of government, and kill the thing entirely. In my opinion, the GOP gave us this bad law, and we should be the ones taking the lead in fixing our mistake.


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