Federal Child Support Regulations Public Comment Period Ending


The Federal government is seeking public comments on some tweaks to the “Title IV-D” child support regulations. (Click on “submit a formal comment” at top right.)

Background: U.S. regulations regarding child support are a hybrid of federal and state law. In theory everything is up to the individual states. In practice, federal regulations tell states that they have to develop “child support guidelines” based on “economic data on the cost of raising children.” As explained in this video from Joe Sorge, producer of the Divorce Corp. movie, the Feds give states financial incentives to designate one parent as “primary” and one as “secondary” and to maximize the amount of child support ordered and then collected. (So if two parents earn the same $100k/year, a state would lose money by awarding a 50/50 schedule to the children (since, in most states, no child support would be paid from one of these equal earners to the other).) In some ways the strangest part is that each of the 50 states plus D.C. is instructed to develop its own guidelines. So every four years consultants get hired 51 times and government workers get paid to meet in 51 separate places to discuss the same federal Census/USDA “economic data on the cost of raising children.” Unsurprisingly they then come to such wildly different conclusions that a child’s cash value can double or triple with a one-mile trip across a state line. It gets further complicated by the fact that some states cap child support while others offer unlimited cash if you can sue a co-parent with a high enough income. Under a strict guideline calculation, for example, a child conceived and living in Connecticut would have roughly 2.7X the cash value if conceived and living 200′ over the border into Massachusetts (what if the parents had sex in Massachusetts but one lives in Connecticut? Then there is litigation over where to have litigation.)

This isn’t up for discussion but as citizens we might want to ask ourselves why we don’t have a system like in most other countries where the cash profit potential for being a parent is determined on a nationwide basis. Why are states having to pay consultants and employees every four years to do something that the USDA is already doing? (note that UCLA professor William Comanor says they’re doing it wrong, though of course Comanor and the USDA economists are much closer to agreeing than a lot of the state committees) Why are states trying to work with federal data that they don’t understand as well as the federal employees who gathered the data?

As an example of what happens when a state hires its own economists, Kansas is instructive. From our book:

Child support guidelines in Kansas are unusually precise. The state hired a pair of economists to develop a formula based on the USDA analysis of expenditures by Americans on children (see the Methodology chapter for a discussion of UCLA Professor of Economics Bill Comanor’s alternative approach). From this starting point, the economists built a formula that that uses 10 digits of precision. E.g., support for a single child if combined gross monthly income is over $15,500 is 2.795182393 times income raised to the 0.689838232 power. This is a declining exponential function that results in a lower percentage of income being ordered for child support as the total amount of income increases. I.e., unlike California, Kansas recognizes that if a person earning $1 million spends 10 percent of his or her income on a child, it does not follow that a person earning $1 billion would spend the same 10 percent ($100 million per year on one child!).

… one has to wonder about the rationale for establishing a formula with 10 digits of precision. That means that a person entitled to, for example, $2,795,182,393 ($2.8 billion) in child support over 18 years would be entitled to this exact number, not $2,795,182,392 or $2,795,182,394. For a person who was going to collect roughly $27,951 in annual child support, the formula would be precise to roughly 1/1,000th of a penny (and thus necessarily the last three digits would be rounded off). The economists who put forward this 10-digit constant note in their report that it is based on estimates from the USDA. And that the USDA estimates themselves are based on a Census Bureau survey of 21,000 households (out of about 125 million households total). As Kansas contains less than 10 percent of the U.S. population, presumably the survey in Kansas was only about 2,000 households. From this data set the state put forward a child support formula with more digits of precision than the world’s physicists, after more than 100 years of experimentation, have been able to assign to the gravitational constant. The Census Bureau itself says that, in the best case of everyone surveyed giving them perfect and precise answers to questions such as “How much did you spend on food last week?”, their numbers contain errors of at least 1 part in 100. Their statisticians note further than they have no way of estimating “nonsampling error” that is due to people giving them incorrect information. [emphasis added]

It is tough to think of a better illustration of a way to shrink an economy through government regulation than to have bureaucrats in 51 jurisdictions doing stuff like this in parallel.

So… if you have an opinion on the laws that affect 17 million children in the U.S., visit Joe Sorge’s site and then click through to the Federal Register to comment.

My own comment, for reference

I am part of a team of five authors that has researched divorce laws and customs in the 51 jurisdictions nationwide. For our forthcoming book we have interviewed roughly 100 divorce litigations nationwide as well as in nearly 10 foreign jurisdictions. We have also interviewed research psychologists, retired judges, and legislators.

We found that the U.S. was unique worldwide. We seem to be the only country where simultaneously (1) obtaining custody of a child can produce more cash than going to college and working at the average college graduate wage and (2) custody of a child is up for grabs and therefore open to litigation. In other countries either the maximum child support obtainable will cover only basic expenses, e.g., $2,000 to $8,000 per year in Scandinavia, or there are strong presumptions regarding how a custody dispute will be resolved, e.g., “mom always wins” or “children’s time split 50/50.” The result is that, as a society, we expose our children to far more custody litigation than any other country in the world. In addition to the psychic toll, this costs us close to $50 billion in cash every year and consumes additional public resources for investigating litigation-motivated claims that a custody defendant is a molester, prosecuting and imprisoning parents who don’t pay child support ordered, etc.

Consider two doctors in Chicago with two children and each having an after-tax income of just over $200,000 per year. Illinois generally favors the selection of a “primary parent” but, with two working parents, a time split of 60/40 or 55/45. Both parents will have to dedicate rooms for these children so the difference in actual cost at 55-percent time versus 45-percent time will be minimal. But the Illinois child support guidelines will result in the loser parent being ordered to pay the winner parent roughly $1 million. The difference between being the winner and loser is therefore roughly $2 million in after-tax wealth over an 18-year period. Illinois thus turns children who are fortunate (each parent has enough income to support both children comfortably) into children who are unfortunate (the parents accept the state’s invitation to wage a scorched-earth custody battle, each trying to be the winner with slightly more parenting time and $2 million in extra cash).

Based on our interviews, the more profitable child support is, above the roughly $4300 per year that UCLA economist William Comanor has found to what middle class parents actually spend on a real world child or the roughly $9,000 per year that the USDA says should cover the costs in a theoretical world, the more litigation occurs. Attorneys report that, compared to in jurisdictions where child support is capped at a modest sum, parents are much more likely to engage in aggressive litigation to obtain the $40,000 per year (tax-free) at the top of the Massachusetts guidelines for a single child, the $72,000 per year at the top of the Utah guidelines, or the potentially millions of dollars in annual child support available in California. (Note that “top of the guidelines” is not a limit; depending on the state, it may be merely a starting point when a high-income defendant is sued.) Attorneys in all of the states where children are profitable told us about parental savings being completely drained for litigation regarding the extent to which one parent would own a cash-producing asset (i.e., a child).

The attorneys’ perspective is backed up by research, e.g., Maya Rossin-Slater and Miriam Wust’s “Parental Responses to Child Support Obligations: Causal Evidence from Administrative Data.” Here’s how we summarized their work:

[the authors] found that what a mother might have gained financially from child support, the child lost in terms of reduced contact with and effort from the father: “mothers, who have substantial say in custody decisions [in Denmark], have the opposite incentive to refuse to share custody and instead receive the higher payment [for child support, compared to shared custody]. … fathers may treat financial transfers as substitutes for other forms of non-pecuniary investments and contact with children, which would also lead to a negative relationship between child support obligations and father-child co-residence.” The economists found that “an increase in the father’s obligation may lead to less attachment to his existing children and more time available to invest in new offspring.” (See the “Divorce Litigation” chapter for our interviewees’ perspective on how the main opposed interests in a divorce lawsuit are the plaintiff parent and the children, not the plaintiff and adult defendant.) The researchers also found that fathers who were ordered to pay more child support were more likely to have new children, thus diluting the time and energy available to prior children, and that fathers who were ordered to pay more child support reduced their working hours due to “market distortions generated by the ‘tax-like’ nature of child support mandates.” Mothers who received more child support cash for existing children were motivated to have additional children, either with or without a live-in partner: “mothers receiving higher child support payments for current children may expect higher transfers for future children if they separate again.” Note that this research was done with data from Denmark, where child support is tax-deductible and capped at $8,000 per year. The effects that they observed would presumably be larger in the U.S. where child support payments are not tax-deductible and can be $25-100,000 per year.

The incentives are simplest to understand in a state such as Wisconsin, where custody of one child entitles the winner to 17 percent of the loser parent’s pre-tax income (about 33 percent of after-tax income). This means that the person who has a one-night sexual encounter with a surgeon will have one third of a surgeon’s spending power. If that person has a second child with a different surgeon, as predicted by the Danish study above, he or she will now have two thirds of a surgeon’s spending power. If the child support recipient then has a third child with a third surgeon, he or she will have the same spending power as a surgeon. Politicians tell Americans to study STEM subjects and work hard in college, but a thoughtful child support plaintiff can enjoy a comparable spending power without ever attending college, working, or paying income tax.

Similarly, while politicians tell Americans to settle down and form stable families, the child support system provides financial incentives to do the opposite. Having three children with one co-parent in Wisconsin yields 29 percent of the co-parent’s pre-tax income, e.g., $29,000 per year if the defendant earns $100,000 per year. Having three children with three different co-parents, on the other hand, would yield $51,000 per year ($17,000 from each, assuming all earn the same $100,000 per year). Other states have more complicated formulae but, especially if the custodial parent does not work, the results are very similar.

States typically limit foster parent reimbursement to about $6,000 to $8,000 per year per child. Presumably this is because they think that all kinds of bad behavior would be encouraged if a child were worth $50,000 per year or more. What did attorneys tell us about what American parents were willing to do in order to get the $50,000 or more per year that U.S. states make available to successful custody and child support plaintiffs? Except in jurisdictions where child support is capped, standard tactics include claiming that the defendant parent is a child molester, that the defendant parent has physically or emotionally abused the plaintiff parent, lobbying teenagers to switch allegiance and primary household so that child support will start flowing in the opposite direction, etc.

Attorneys also told us that the sale of abortions has become common: “The Supreme Court made abortion legal with Roe v. Wade in 1973 and Congress made abortion profitable in 1988 with the federal Family Support Act [that required states to develop child support guidelines],” is how one attorney summarized the evolution of law in the last quarter of the 20th century. The new state guidelines made an out-of-wedlock child just as profitable as the child of a marriage. Our interviewees report that it did not take long for people to put these two legal innovations together and thus began the age of women selling abortions to men. “If the child support guidelines make having a baby more profitable than working,” a lawyer noted “it only makes sense that 5-10 years of the average person’s income is a fair price for having an abortion.” The business of selling abortions, oftentimes for $250,000 or more, has been accelerated by the availability of the NIPP (Non-Invasive Prenatal Paternity) test, a simple test on the pregnant mother’s blood.

Our interviewees reported a general inverse correlation between child support order amount and the well-being of children. In other words, the child yielding $100,000 per year for a victorious parent was worse off than the child yielding $10,000 per year. They attributed this to the fact that the child who could produce more cash was the subject of more litigation. This is also consistent with economics researchers who found that there was no correlation between the wealth of an adoptive family and the ultimate adult income of an adoptee (in other words, a child adopted into a rich family didn’t go on to earn more money than a child adopted into a lower-middle-class family).

The current system of potentially unlimited and determined-by-each-state child support amounts leads to inconsistent outcomes. The child of a one-night drunken sexual encounter in Superior, Wisconsin might be worth $5 million to the custody victor. If the two parents had sex two miles away across the bridge into Duluth, Minnesota where child support is capped, the same child would have a cash value of only about $400,000 over 18 years. The discussion of Section 302.56 talks about “basic fairness” being a goal and “a sense of injustice” being something to avoid among citizens. How can it be fair for the cash value of a child to be so different across a state line? If “justice” means a child yields $5 million in cash in Wisconsin, how can the $400,000 in Minnesota be “justice”? Does “basic fairness” require that a custodial parent of a single child get $100,000 per year, as in California, or the $13,000 per year cap of Nevada? If $100,000 is “fair” then isn’t $13,000 “unfair”? Canada has a single child support formula for the entire country, with small adjustments for the different costs of living in various provinces, so that these cross-state disparities are minimized. Why does it make sense for Wisconsin and Minnesota each to appoint a commission and then to come with wildly different interpretations of “fairness” and “justice”? By regulation the federal government requires states to consider “economic data” in developing guidelines. In practice all of the data come from federal sources such as USDA and U.S. Census Bureau. Wouldn’t it make more sense to have these agencies do the technical work of developing guidelines?

Finally we note that the federal and state governments have set up a system that discourages healthy adults from working and paying taxes. In states with “income shares” child support systems, the custodial parent who works faces an extraordinarily high effective tax rate, especially when he or she is collecting child support from multiple co-parents, an increasingly common situation. For every after-tax dollar earned via wage labor the custodial parent may lose 50 cents or more via reduced child support. Assuming that one can find a high-income sex partner and obtain custody of the resulting child, for most people it is not economically rational to work and pay taxes in states that offer unlimited child support.

We try to refrain from making policy recommendations in our book, which is an attempt to inform consumers regarding the laws across the nation. However, many of the lawyers that we interviewed suggested that child support should be limited to something close to the actual cost of providing a child with the basics, i.e., not too far from the foster care reimbursement numbers. They also suggested decoupling the child support calculation from the parenting time schedule. In their opinion these changes would greatly reduce the number of custody lawsuits. Here is a sampling of what attorneys told us regarding the interaction between litigation and child support revenue: “Of course there are people who are concerned about the kids, but they are not very common. Sad to say it is all about money here in the U.S.” (New York); “It is hard for many of us [divorce litigators and judges] to admit that a lot of these [custody] battles are really about money, but they are.” (North Dakota) “”Sadly [arguing over a child’s schedule] is a money-driven process a lot of the time.” (Utah)

The language of child support and custody statutes is high-minded and our interviews with legislators revealed that policymakers are well-meaning. The reality on the ground is that a substantial number of Americans use this system as a no-holds-barred grab for cash. The system is set up under the assumption that Americans will not follow economic incentives when children are involved. Our interviews and all of the published research show the contrary. If you offer a person enough cash his or her behavior will change, usually not to the benefit of a child.

At the opposite end of the income scale we found that an enormous amount of pain and suffering was inflicted on low-income child support defendants with no corresponding benefit to plaintiffs. A $4 billion government bureaucracy makes aggressive efforts, including imprisonment, to get hundreds of dollars per year out of noncustodial parents who themselves earn only poverty line wages. As far as we can tell this doesn’t result in significant payments to custodial parents. The only financial beneficiaries are government workers in child support enforcement roles, prisons, courthouses, etc. For example, we know of a Massachusetts landscaper who has primary custody of two children because the mother is a drug addict. There is a court order in place for her to pay the custodial father $600 per year, but she does not make these payments. He could call up the Massachusetts Department of Revenue and have government workers bring her into a taxpayer-funded courthouse where she would eventually be put into a taxpayer-funded prison. The only thing that he is guaranteed not to get is the $600. No private citizen would pursue a drug addict to collect a $600 debt. Why are taxpayers?

Concretely, we would suggest modifying 302.56 to include the following provisions: (1) Except in cases of disability or similar special needs, maximum child support obtainable shall be limited to the USDA’s estimate of total expenses incurred by middle-income husband-wife families; (2) Parents who earn less than the Federal Poverty Guideline shall be exempt from paying or accumulating a child support obligation.