I think government fines should be destroyed once collected. There’s no other way around the perverse incentives.
You could send it to the federal reserve balance sheet, or withdraw the funds and shred the cash. Or maybe apply it to the national debt since it’s so massive nobody would feel any benefit from the fine. Whatever, I don’t care.
But no benefit should befall anyone - the only goal should be to prevent bad behavior.
I think literally destroying the cash would be a good solution except that the normal voter doesn't understand that this doesn't destroy value. So it would have serious rhetorical challenges. (Also, the value accrues to current holders of cash; not sure whether this might be too regressive/progressive relative to the "default" way that transfers are made.)
You could send it to the federal reserve balance sheet, or withdraw the funds and shred the cash. Or maybe apply it to the national debt since it’s so massive nobody would feel any benefit from the fine. Whatever, I don’t care.
But no benefit should befall anyone - the only goal should be to prevent bad behavior.