Revolving Door Sham: JPMorgan CFO Admits $7 Billion of DOJ Settlement is Tax-Deductible

[Jim Lane]

8. The stockholders will feel it. Most of it still carries down to net post-tax income.

A deduction isn't the same as a credit. As long as the nominal corporate tax rate is less than 100%, paying a fine and deducting it will still leave less money for stockholders.

The way to make it a proper deterrent is to ensure that the initial amount of the fine is large enough. When an amoral corporation is considering doing something shady to increase its profit, it will weigh the prospective profit against the risk of being caught and fined. The larger the anticipated fine, the less likely it is that the corporation will take the action.

An even better deterrent, of course, would be individual criminal liability for corporate officers who cause the company to undertake the misconduct.