Congress Tags Child Support as Luxury Income; Collection System an Economic Failure

http://mensnewsdaily.com/2008/08/16/...nomic-failure/



Congress Tags Child Support as Luxury Income; Collection System an Economic
Failure



Roger F. Gay

2008-08-16



Fathers' rights activists have complained about arbitrarily high child
support orders for almost two decades. Class action suits were filed, the
fathers' rights movement grew, debates broke out in academic journals, a few
social scientists demonstrated with calculations and documentation, some men
have committed suicide because they were unable to support themselves, and a
few serious investigative journalists analyzed in depth.



Congress finally decided to act - with a flat luxury tax on child support
income.



Starting next month, parents will see an "annual fee" of $25 deducted from
child support payments as part of a new federal law. It applies to families
not in the welfare entitlement system, but who have been forced into the
federal child support collection system. Child support money is already
taxed at the payer's end as part of regular income with no deduction.



On the basis of constitutional law, child support, along with other marriage
and family issues, is a private issue that has historically been handled in
state civil proceedings where at least some modicum of individual civil
rights was observed. Laws enacted during the Reagan years ultimately led to
the legal reclassification of marriage and family as "social policy,"
incorporating them fully into federal welfare programs. This upset the
entire balance between personal life and government intrusion.



At stake were billions of dollars each year in federal hand-outs to states
for the operation of highly computerized child support collection systems
that initially most states did not want. Each state already had computerized
welfare systems and found no advantage in the new product being forced on
them by the federal government. Congress responded by allocating money to
pay the bill and added incentives to drive higher income, non-welfare
families into the system. The private collection industry joined the fray
and the era of intense "deadbeat dad" propaganda began.



The incentive payments - based on the amount of child support paid through
each state's system - also provoked arbitrary increases in the amount of
child support ordered. This increased both federal payments and collection
industry profits. In response to class action lawsuits, federal courts
reclassified marriage and family as "social policy." This secured the
federal invasion and allowed arbitrary political control of private child
support amounts, as with the setting of welfare entitlement levels.



The application of child support laws needed some work. Although never
properly analyzed, there were many complaints that the amount ordered
depended largely on the judge making the decision.



Inconsistency was the basis for replacing case-by-case decisions with
politically-determined child support formulae, which still differ from
state-to-state. The signal that arbitrary political control was not a
solution was immediate, particularly for low income families. Low income
payers were often ordered to pay more than the income they received. Higher
income payers, shocked by the new gap between any reasonable assessment of
their children's needs and payment levels were simply told, "you can afford
it" (you mangy greedy deadbeat who dared ask).



There have since been serious efforts to define appropriate child support
formulae, such as here, but they have been virtually ignored in political
circles. Reducing amounts ordered to reasonable levels would lower income
from the federal program.



The clumsy and destructive force of draconian political control is more
often reported when it harms custodial parents. The luxury tax will be
charged to any custodial parent who has received more than $500 in child
support. Parents receiving greater amounts may be getting the message, "you
can afford it," but questions have been raised about those receiving small
amounts. That might not be the right place to focus attention.



The purpose of the tax is to pay down the federal deficit. Why should the
deficit be a particular problem for child support payers and recipients? For
children of divorced and never-married parents? More money is needed to pay
for security and defense in these troubled times, but that certainly does
not account for special focus on this particular group.



The answer lies in the cost of the federal child support collection program.
In the 1990s, promoters called it an "investment." There was consensus among
promoters that spending on child support collection would more than pay for
itself by reducing welfare dependency allegedly stemming - not from
inability to financially support a family - but simply because "deadbeat
dads" were allowed to "get away with it." Other taxpayers, paying their
children's bills, should be outraged, they argued.



But, aside from a small percentage of cases, easily dealt with through means
available to state courts, this was never the case. Statistics showed
correspondence between non-payment and poverty - i.e. low and no-income
fathers. Statistics on "collection" since the start of the program have
shown no significant increase in the percent of the amount ordered that is
paid.



Proponents of the program - including the state and private collection
industry - often misreport "collections" to payment ratios by including all
regular payments forced through state systems.



Payments that would have been paid directly between payer and recipient if
not forced through the government system comprise most of the "collections"
reported for both promotional purposes and for calculation of federal
incentive payments. They are not problem payments that ever required action
to collect. They are primarily from non-welfare related cases that would not
impact the cost of welfare programs even if they were "collected."



The luxury tax on child support is specified in the Federal Deficit
Reduction Act of 2005 specifically for the purpose of paying for the child
support collection system. The decision - backed by GAO assessment - clearly
demonstrates that the program has not paid for itself and does not have the
potential to do so. The question that needs to be asked is; Why is this
program not abolished?