When police stopped a 49-year-old businessman, they discovered his blood alcohol level to be well over Norway’s legal limit. Citing the man’s personal wealth of more than $30 million, a court ordered him to pay $109,000 as a drunken-driving penalty — almost his entire annual income. In Norway, fines are based on income and personal wealth.

Listen to the brief NPR item here.  A similar system is in place in Finland where according to this older story, there was a fine in 2004 of 170,000 euros, the largest I could find.

From a pure revenue point of view this makes sense although it seems like the fines are rising too quickly with wealth.  You would raise more revenue by setting the fine a little lower than my entire annual income and induce me to get caught more often and pay more fines.

From an incentive point of view there might be two rationales.  The effect of a fixed penalty gets smaller as my income increases so to generate the same deterrent you want the fine to rise with income.  Alternatively, you might wish to make the fine so high so as to deter anyone from ever consider breaking the law but you can only expect to extract such a fine from the very rich.  The latter story is suspicious because, based purely on efficient incentives, you do want people to sometimes drive drunk if it is sufficiently important, for example if they need to rush someone to the hospital.  And perhaps a better way to deal with the former issue is to just take away driving priveleges for some length of time.  That would be a simple way to make the effect of the penalty constant despite varying income.

But shouldnt the fine also vary with the income of all the other drivers in the vicinity?  Their income is a measure of the value they contribute to society and so its a good measure of the externality caused by the unsafe driving.  If you are putting people with high income at risk then you should be fined appropriately.