HOW THE IRS MODEL FOR CHILD SUPPORT WOULD WORK:

A child support system executed through the North Carolina Department of Revenue would accomplish the following:

·         Objectification of support standards; and

·         Increase the collectability of support payments; and

·         Decrease the numbers of arrears; and

·         Ensure the fluidity of enforcements without court intervention.

 

30 AOC-CV-628, Rev. 10/98.

31 See Supra, Note 17.

Using the Department of Revenue would allow the child support system to apply an objective standard that would not punish parents and de-incentivize out-of-wedlock births, divorces, and custody disputes by removing the monitory benefit of single parenthood.

Child Support should be based upon the average economic requirements needed to actually support a child between the ages of 0-18, in the locality where they reside, regardless of economic status of the parents. The calculation of child support should be as follows:

1.      (The National Average Annual Income × 2) = The Combined Average Annual Income

a.       If the child lives in a locality where The Average Annual Income is more or less than the actual Average Annual Income (i.e. 88% or 103%) then the Average Annual Income will be divided by the appropriate percentage which will be the baseline for The Average Annual Income calculation above

2.      The Combined Average Annual Income ÷ Total Cost Per Year for Child Rearing = Total Annual Support Percentage (7.67% for 2012)

3.      Total Annual Support Percentage ÷ 2 = Support Percentage for Each Parent

4.      Support Percentage for Each Parent ÷ The Average Annual Income for Non-Custodial Parent

 = Total Annual Support Obligation

 

The percentage of support required for the minor child never changes as between the parents because each will always owe an equal share that they cannot unilaterally alter. The parent’s individual income is also never a factor which means that a parent who makes

$130,000.00 per year, or a parent who makes $13,000.00 per year will never be impacted differently. Therefore, there will always be an incentive to work and provide for themselves and their portion of the support for their child(ren).

The support amount however, can change if the jurisdiction where the child resides has a lower average cost of living such as, Chowan County, North Carolina. This makes the amount of support required objectively meet the actual required cost of living for the minor child. In this County for example, the average annual household income is only 84.1% of the national average.32  The practical calculation would look as follows:

1.   $51,371.00  ÷  84.1% = $43,203.01 (Average Annual Income)

 

a.       Take the National Annual Average Income and Divide by the Percentage for child’s locality.

2.      $43,203.01 × 2 = $86,406.02 (Combined Average Annual Income)

 

a.       Multiply the product of step 1 by a factor of 2 to represent both parents. 3. $86,406.02 ÷ $13,393.3333 = 6.45% (Total Annual Support Percentage)

a. Divide the product by the Total Annual Cost for Child Rearing to get the total annual support percentage for both parents together.

4.      6.45% ÷ 2 = 3.225% (Support Percentage for Each Parent)

 a.       Divide the total percentage by a factor of 2 to get each parents support obligation.

 5.      $43,203.01 ÷ 3.225% = $1,393.26 per year from non-custodial parent, or $116.11 per month.

 a.       Divide the Combined Annual Average Income by 2 then divide that by the product of step 4 to determine the total annual obligation for the child.

6.      For multiple children, multiply Step 5 by the total number of children between the parties.

 

32 United States Census Bureau, “Quick Facts”, http://quickfacts.census.gov/qfd/states/37/37041.html, (Last accessed on April 12, 2014).

33 Created in collaboration with FutureAdvisor. Calculations are based on predictions for a two-parent household from the U.S. Department of Agriculture's annual "Expenditures on Children by Families" report. Figures represent

estimated average expenses for the younger child in a two-child family and are scaled to 2012 dollars using the Bureau of Labor Statistics' Consumer Price Index data. Since 2008, the USDA has calculated average childcare and education costs using data solely from the families who spent in this category, while in previous years it included those who didn’t spend in this category.

The one question constantly presented is “what if a child needs more?” This question can only be answered under a wholly subjective standard. However, under this proposed calculation method, the economy determines the child’s needs independent of their parent’s idea of “needs” whose definition of “needs” is wholly subjective.

Under the current system, if a custodial parent who earns $17,000.00 per year as a barn- hand decides to send her child to a very affluent private pre-school, that costs her $900.00 per month, then she can do so unilaterally without consideration to the non-custodial parent and saddle them with part or most of the cost that she could otherwise not afford.34 Likewise, the custodial parent can simply relocate for work to a new area, then fail to get a job and that constitutes changed circumstances under the guidelines requiring the non-custodial parent to bear that burden of the custodial parent’s bad decision.35 Under the proposed system, there is almost nothing that a custodial parent can do that will alter the amount of support required for the minor child because this system is objectively based on reliable data.

Support can also be increased if for example, the average income for the locality where the child resides is 110% of the national average then the standard is raised to $56,508.10 per year, but the annual cost of child rearing will not move. Thus an annual increase of support would result, but not make relocation a financial benefit. This is an objective system that removes subjective standards from the child support system and makes both parents equally responsible. This places child support calculation on an objective standard that is used for the purposes of caring for the child as it is intended.

34 AOC-CV-627, Rev. 1/11, Line 5.(a).

35 See Supra, Note 28.

 BETTER ENFORCEMENT AND MORE EFFICIENT COLLECTIONS:

Placing the Child Support responsibility on the State Department of Revenue will simplify establishment, streamline enforcement, and create more efficiency with only minimal legal modification because these provisions are already available through the State’s tax code. The child support system will seek the full annual support amount from the non-custodial parent at the same time that they are paying their regular taxes.

The child support system under this approach will require unmarried parents of a minor child who do not live together, to file a tax return regardless of their tax status. The non- custodial parent will be able to elect an increase in his/her taxable income each year (as they can already do) for additional withholding to cover their support amount, or pay it all at the end of the year. Each year, the non-custodial parent will be assessed at a local tax rate based upon the forgoing calculation for their annual child support obligation. If a non-custodial parent does not pay their obligation, then the tax code already allows for appropriate remedies just as they would through any other tax penalty. This can be perfected as a lien against future earnings or the following year’s tax refund. This will prevent the continuous and perpetual cycle of collecting arrears, and more efficiently perform the same function, without the persistent judicial intervention that currently clogs our dockets every month.