Every crime should be described by at least three numbers: the crime’s direct cost, the crime’s indirect cost, and the sum of the crime’s direct and indirect costs. All these costs would be determined in court, through arbitration, or through some other sort of government authorized process.

Direct Costs

A crime’s direct costs should include financial compensation equivalent to whatever theft or damage occurred (minus the value of such property returned before a verdict has been issued), compensation for lost wages, ‘pain and suffering’ (including ‘fright’, see below), etc. The value of any damaged or stolen property that has been returned to its rightful owner before a verdict or judgment has been issued would be deducted from the criminal’s bill of direct costs. After a verdict or judgment has been issued, no deductions could be made but any stolen property would still be required to be return to its rightful owner, unless the owner chooses not to take possession of it. If such stolen property is discovered to not have been offered to its rightful owner, then new charges of theft could be imposed.

Compensation for Fright

Included in this direct cost category, and more specifically under the ‘pain and suffering’ subcategory, should be a penalty levied against criminals to compensate their victims for any fright experienced during the commission of their crimes. For example, if you left your wallet on a restaurant table while you went to get some food and somebody stole your wallet while you were away, the penalty against the criminal would be a certain multiple, perhaps a multiple of 5 or 10 times (determined by the courts) the value of the wallet and its contents. However, if someone stopped you on the street and threatened to beat you up if you didn’t give him your wallet, then the penalty for the crime would still be 5 or 10 times the estimated value of the wallet and its contents plus a certain separate amount to compensate the victim for the fright he endured. The exact amount of this ‘fright factor’ penalty would be determined by the courts and would depend on the facts of each particular case, but an example may be that in a crime, such as in a wallet robbery where no weapons were threatened or used and only verbal threats made, the penalty should be at least $2,000.

Indirect Costs

A crime’s indirect costs would include all other costs associated with processing the crime through a civil process, such as investigative expenses, court costs (for both the criminal and the winning side), detention, incarceration, deportation (if applicable), any other supervisory costs associated with the criminal’s punishment, etc.

Interest Applied to Direct and Indirect Costs

Together, the sum of these direct and indirect costs would be defined as the total cost of the crime. Interest, at normal market lending rates, should be charged on the direct portion of these costs until the criminal pays them off completely. The indirect costs of a crime would also be charged interest, but only at a rate equal to the rate of inflation. All direct cost interest charges should begin to accrue on the date the crime was committed. Indirect cost interest charges should begin to accrue on the date the trial ended. Any payments made by the criminal would first go exclusively to pay off the direct costs of the crime while all subsequent payments would be applied to the indirect costs.

However, the ability of the criminal to pay should be the largest, if not the overwhelming, factor in setting the final interest rate. Criminals in possession of sufficient assets such that a liquidation of a portion of those assets to completely pay off their crime would not cause the criminals excessive hardships both for themselves and their dependents, should be required to pay a significantly higher interest rate so as to encourage the rapid payment of the fines. The ratio of the criminal’s ‘excess’ assets to total cost of the crime would be the primary determinant for setting these increased interest rate charges. The interest rates would be set at an exponential rate so that a convicted criminal with ‘excess’ assets equal to the total cost of the crime would pay an interest rate twice as high as the minimum rate, while a convicted criminal with ‘excess’ assets that are valued at twice the total penalty amount would be required to pay an interest rate that is 4 times as high as the minimum rate. If the ‘excess’ assets are valued at three times the total penalty amount, the interest rate would be set at 8 times the minimum rate.

In addition, any personal income in excess of $100,000 for an individual or $150,000 for a married couple (adding $15,000 for each dependent) would automatically be garnered to pay criminal penalties.

Punitive Penalties

After the ‘costs of a crime’ have been determined by a court, an additional punitive amount should be applied which is based only on the crime’s direct cost. The courts would multiply the direct costs by a certain number, generally between 1 and 10 or higher in extreme cases, based on the particular facts of the case, such as motive, method, the nature of the fright experienced by the victim, etc.

Generally, a higher punitive multiple would be applied to the more egregious crimes. Another general rule would be that lower dollar values for a crime’s direct cost would result in higher punitive multiples, and vice versa.

This punitive penalty would constitute the actual punishment or penalty for committing the crime. Without this punitive penalty, criminals are not really being punished for their crimes; they are merely being required to give back what they have stolen and/or pay for what they have damaged. Criminals would begin to pay off their punitive judgments after, but as soon as they have paid off the direct and indirect costs associated with their crimes.

A minimum punitive penalty of $500 should be levied against any person (over the age of majority) convicted, in court, of a crime, whether it is the stealing of a $1 pen or any other more significant crime. If the criminal settled the case during arbitration, the minimum punitive penalty should be $250. These minimum punitive penalties should be reduced by half when applied to minors.

For example, a punitive multiple of ten may be imposed for the theft of a bicycle valued at $200. The direct cost of the crime could be $200 (assuming no fright penalty or other damages), but the total amount to be paid by the criminal would be $2,000 plus any court costs and other associated expenses. Stealing a $25,000 car may have earned the criminal a multiple of 3 or 4 resulting in a total fine of $75,000 or $100,000. Stealing $1,000,000 worth of jewelry may get a multiple of 2, in which case the punishment would be $2,000,000 plus any court costs and other associated expenses. Of course, if the owners of these items were frightened or harmed, or if additional property damage resulted, the crime would thus involve more than just the mere theft of the property, resulting in direct costs that are higher than merely the physical cost of the items stolen. As a result, while the multiples, which are based on the crime’s direct costs, could still be the same value, the total amount that the criminal must pay would naturally be significantly higher.

Nominal Interest on Punitive Penalties

A minimum interest rate equal to the rate of inflation would be charged on punitive penalties. Since the government is required to automatically repay the victims for all direct and punitive costs of the crime committed against them, requiring criminals to pay nominal interest rates on these punitive penalties would prevent the government from losing money as it would likely need to wait for years before the criminals are able to repay them back. As with the interest payments for both the direct and indirect costs of a crime described above, increased interest rates should be allowed on these punitive penalties based on the amount of a criminal’s ‘excess’ assets.