Source: https://libertyunyielding.com/2014/01/06/virginia-likely-impose-excessive-child-support-obligations-upcoming-legislation/
Timestamp: 2019-04-25 16:53:47+00:00

Document:
Virginia appears to be on the verge of increasing its child-support schedule, which already imposes excessive child-support obligations on many (but not all) non-custodial parents. The proposed child-support increase ignores basic economic realities and overestimates the cost of raising children. It also appears to double-count expenses and make non-custodial parents pay custodial parents for costs that custodial parents have indirectly been reimbursed for by federal and state tax codes. It would force some low-income parents to pay what they cannot possibly pay, and substantially increase high-income parents’ obligations based on a misreading of Virginia child-support history and a likely failure to consider tax increases recently imposed on upper-income households. The increase is contained in a bill, HB 933, recently introduced in Virginia’s House of Delegates.
(Before I proceed any further, I should note that I have no personal interest at stake here: I am not divorced, and do not owe, pay or receive child support, and am raising my daughter with my wife, to whom I remain happily married. And although I am a lawyer, I don’t practice family law in Virginia. So I will not be affected by the proposed child-support increase).
But the schedule she has drafted increases the child-support obligations of some non-custodial parents who already pay over 50% of their income in child support (child-support obligations are the sum of the amount mandated by the child-support schedule, plus various statutory add-ons imposed on top of the amount mandated by the schedule). How can this make sense to anyone? But that is what her proposed schedule does.
For an example of a father further impoverished by Virginia’s child-support guidelines, see the Virginia Court of Appeal’s decision in Herring v. Herring, 532 S.E.2d 923 (2000). In the Herring case, the child-support obligation of the father, who made $1300 per month, was $673 per month under Virginia’s child-support guidelines for just two kids (his ex-wife made $1600 per month, for a combined household income of $2900 per month). John Herring, who earned only $1300 a month, was so poor that he had already been reduced to living in his sister’s basement. When a trial judge reduced child support obligations from a crippling $673 per month — consuming most of his net income — to a more reasonable $484 per month, the Virginia Court of Appeals reversed that reduction, because it was contrary to Virginia’s existing child support guidelines.
Under the increased child-support schedule drafted by Dr. Venohr, this poor man’s child support would go up substantially. His basic child-support obligation (not counting statutory add-ons, which were a majority of this man’s child support obligations) would go up by $59 or 8.7%. See pg. B56 of the child support panel report, showing increase of 8.7% and by $59 from $675 to $734 for households with combined monthly income of $2900.
The increased child support schedule proposed by the Virginia child-support panel report inflates non-custodial parents’ obligations by making them pay for costs that the custodial parent has already effectively been reimbursed for by things like the $1000 per child refundable tax credit, and the personal exemption from tax attributable to the child, and the earned-income tax credit, a subject I discuss in more detail further below.
The report accompanying the child-support increase hints that the proposed increase in child support did not take these things into account (to reduce non-custodial parents’ obligations), for the lame excuse that they are not reflected in monthly tax withholding, even though they are reflected in the custodial parent’s annual income. See Virginia Child Support Guidelines Review Panel, Report to the Governor and General Assembly (December 16, 2013).
the tax formula for custodial parents is only substantially different in the year-end tax filing, but there is no difference in the monthly income tax withholding formula for single taxpayers and head-of households. Further, the income withholding formula is more realistic for family budgeting since families tend to live paycheck to paycheck. The withholding formula does not advance the earned income tax credit and does not consider the child tax credit, which are sources of the tax code that may contribute to more after-tax income for the custodial family.
Never mind that a thrifty low-income custodial parent could take care of a child entirely using the money derived from the $1000 per child refundable tax credit, the earned-income tax credit, and the personal exemption’s exclusion of $3900 in income from taxation. For many lower-income households, tax benefits like the refundable tax credit amount to most of the cost of raising a child. Upon a divorce, tax credits and exemptions are typically claimed by the custodial parent, to the exclusion of the non-custodial parent. (In Virginia, unlike most states, judges have no authority to order the custodial parent to waive the child tax exemption or credit so that it may be claimed by the non-custodial parent, even if the non-custodial parent provides most of the financial support for the child. See Floyd v. Floyd, 436 S.E.2d 451, 463 (Va. 1997); Pearlene Anklesaria, Child-Related Tax Breaks for Divorced Parents, 22 J. Am. Acad. of Matrim. L. 425, 426-27 (2009) (contrasting Virginia law with the law of most states). The custodial parent is also more able than the non-custodial parent to claim the Earned Income Tax Credit.
On page B16 and B34, the child-support report suggests that the schedule may engage in another form of double-counting of expenses at non-custodial parents’ expense. It apparently increases the child-support obligation at each income level based on past inflation, even though the schedule itself largely self-adjusts for inflation by making child support obligation rise with the parents’ income (income generally rises due to inflation, and child-support obligations are a function of income under Virginia’s child-support schedule). You cannot increase the non-custodial parent’s child-support obligations twice for the same inflation, first due to his increase in income due to inflation, and then yet again due to the inflation itself.
Median income for all Virginia households (with and without related individuals) increased from $61,000 (in 2012 dollars) in 1989 to $64,632 in 2012. In other words, income growth generally outpaced inflation in Virginia.
The report also likely understates the child support the typical non-custodial parent will pay because it assumes that daycare expenses will be as small for divorced parents as for married parents, and subtracts only that smaller amount from the schedule amount. (In imposing child-support obligations, Virginia courts do not simply impose the amount contained in the child-support schedule, but rather add to that amount by imposing additional, statutory add-ons, such as for daycare expenses, see Va. Code § 20-108.2(F)).
But the child support report understates the child support the typical non-custodial parent will pay because it assumes that daycare expenses will be as small for divorced parents as for married parents, and subtracts only that smaller amount from the schedule amount. See pg. B35, Exhibit 5 (showing child care percentages for married couples as low as 0.63% for one income level). But in divorced households, one parent usually doesn’t look after the kids while the other parent works, so such expenses — awarded by Virginia courts on top of the child-support schedule amount — are larger. And parents who spend more on daycare spend less in other ways, both on the child and on themselves (due to a crowd-out effect, as any economist would concede; I have an economics degree, and some graduate-level economics coursework, such as econometrics.). Thus, in real life — unlike under Virginia’s child support guidelines — the basic child-support obligation should be reduced somewhat when the parents have substantial add-on expenses like daycare expenses.
But that is not what happens in Virginia, under either the existing child-support guidelines or the proposed increased guidelines. Instead, courts impose onerous obligations on non-custodial parents. For example, in the Herring case, the child-support obligation of the father, who made $1300 per month, was $673 per month under Virginia’s child-support guidelines. See Herring v. Herring, 532 S.E.2d 923 (2000). Daycare expenses were not just 0.63% of Herring’s child support. In fact, they were almost half of all his child support obligations — nearly as big as the entire child-support schedule amount that they were added to. See Herring, pg. 925 (“On April 27, 1999, the district court calculated the presumptive amount of support based on mother’s gross income of $1,600 per month and father’s gross income of $1,300 per month—a distribution of fifty-five and forty-five percent, respectively—at $675. After adding expenses of $667 per month for child care and $154 per month for health insurance coverage, the district court determined that father’s forty-five percent share of the total was $673 and ordered father to pay that amount each month.”).
If the gross income of the obligor is equal to or less than 150 percent of the federal poverty level promulgated by the U.S. Department of Health and Human Services from time to time, then the court may, upon hearing evidence that there is no ability to pay the presumptive statutory minimum, set an obligation below the presumptive statutory minimum provided doing so does not create or reduce a support obligation to an amount which seriously impairs the custodial parent’s ability to maintain minimal adequate housing and provide other basic necessities for the child.
Is it even constitutional to order someone to pay something the court knows they cannot pay, on pain of contempt of court? Virginia courts have always had the discretion to reduce child support downwards from the schedule when the non-custodial parent cannot pay and ordering such payment would be an exercise in futility. This provision would seemingly take that discretion away, in the guise of permitting them to “set an obligation below the presumptive statutory minimum.” Never mind that the Supreme Court’s decision in Turner v. Rogers (2011), indicates that states cannot enforce child support obligations that a non-custodial parent is simply unable to pay.
The proposed increase may also increase court costs in Virginia by increasing the number of time-consuming proceedings involving dead-broke non-custodial parents unable to pay their full child-support obligation. The Supreme Court’s decision in Turner v. Rogers (2011) made clear that states cannot constitutionally jail parents for contempt for not paying child support, if the non-payment is due to a genuine inability to pay. Moreover, while the Court stated that while the Due Process Clause does not “automatically require the provision of counsel at civil contempt proceedings to an indigent individual who is subject to a child support order,” the state must provide either appointed counsel (at state expense) or “alternative procedures” to enable the non-custodial parent to effectively prove his inability to pay.
The proposed new child-support schedule fundamentally inflates child-support obligations, and relies on an overestimate of the actual amount parents spend on children, because it uses the Rothbarth-Betson method of calculating child-rearing costs. While this method is not the worst method of calculating costs — there are other methods used in many states that yield even more inflated results — it nevertheless has a bias in favor of overestimates.
The Rothbarth method also overstates child-rearing costs because it assumes that reductions in consumption of adult goods are the result of child-rearing costs, rather than increases in the effective price of adult-only goods due to the presence of the children that in fact have little effect on the household’s overall living standard. “For example,” notes Australia’s agency, “the birth of a child will increase the price of outside entertainment for a couple if babysitting services need to be paid for,” reducing the amount of outside entertainment they purchase even if the child costs very little to raise.
I and my wife spend very little on our daughter compared to the amount households with our income level are ordered to pay under Virginia’s existing child support guidelines, which assume that the average household spends lots of money on their kids. Yet our consumption of adult-only goods like tobacco, alcohol, and forms of entertainment aimed at adults has crashed since the birth of our daughter.
We no longer go to adult-oriented comedy clubs, like the Improv, because the material wouldn’t appeal to our daughter. My wife now smokes less, to reduce our daughter’s exposure to second-hand smoke, and uses E-cigarettes. Since becoming a father, I have consumed less alcohol, because when I am caring for my daughter, I don’t want to risk a spilled wine glass, don’t want to lose focus (even if it would be relaxing), and don’t want to tempt my daughter to drink my wine. Owing to scarce time left over after caring for our daughter, my wife has bought far less adult clothing since the birth of our daughter.
Using the Rothbarth methodology, which assumes that a reduction in spending on adult-only goods is the result of child-rearing costs, it would seem like we spend much of our income on our daughter. But nothing could be further from the truth. In reality, we actually spend only a few percent of our household income on our daughter, and the costs attributable to her have never approached half of what Virginia’s child support schedule assumes households with our income typically spend on their children.
As Australia’s child-support agency notes, “The logic underlying the Rothbarth method is that children brings needs but no resources to a family, and those needs can be met only by making cuts elsewhere in the budget.” This is itself a flawed assumption that can lead to overestimates of the cost of raising a child, since in developed countries, “families with children receive government child related income supplements to assist with the costs of bearing and raising children so that in reality children bring additional resources to a family.” For example, in the U.S., households receive a refundable child tax credit (which lower income-households can receive from the government even if they pay no income tax), a personal exemption of $3900 per child from taxable income, and tax credits from the federal government to cover part of the cost of providing daycare for the child (as well as a tax exemption from the State of Virginia for the same expenses).
Although there have been several changes to the narrative portion of the guidelines statutes since their original enactment, Virginia has never updated the actual table of obligation amounts titled Schedule of Monthly Basic Child Support Obligations found at Va. Code § 20-108.2(B). Virginia is one of only eight states never to have updated and revised its original guideline schedule.
But the legislature did revise the child support schedule in 1995, through HB 945, signed into law on Jan. 25, 1995. That bill properly got rid of some of the excessiveness of the child support levels for upper-income households. A Virginia legislative web page describing that bill and its history is found here.
The panel’s proposed schedule partly nullifies the 1995 change by reinstating in part the excessive child support amounts for upper-income households contained in the original 1988 child support schedule. It increases child support obligations by more than a quarter for many such households.
This increase is not warranted. While the panel did not fully restore the excessiveness of the original 1988 schedule as to such households — recognizing that they have faced a tax increase that reduces their income to spend on children (the new 0.9% Obamacare Medicare tax on upper income households’ earned income), there is no sign that it took into account other, far more significant recent tax increases on upper-income households that recently went into effect that will reduce disposable income for such households, such as the 3.8% Net Investment Tax contained in the Affordable Care Act (levied on capital gains, dividends, investment interest, passive rental income, and other investment income), and the additional increase in capital gains tax rates and dividend tax rates from 15% to 20% for many households that recently went into effect as part of the earlier deal between the President and Congressional leaders to resolve the so-called Fiscal Cliff. For a discussion of the Medicare tax and the Net Investment Tax, see this link at Forbes Magazine.
It’s just a piece of paper, Little Sisters of the Poor. Why not sign it? Here’s why.

References: v. 
 v. 
 § 20
 v. 
 v. 
 v. 
 § 20