The U.S. Tax freedom Day is estimated to be on April 19, 2018 but for those who pay a child excise tax (AKA Child Support) the tax freedom day occurs later, much later, in the year. Our estimate is that a non custodial parent has to work until August 1 to pay the combined tax load. That’s into the 8th month of the year before you see a penny of your hard earned dollars.
Why is it a Child Excise Tax and not “child support”?
Matrimonial issues, including child custody and support are issues reserved to the states. But the federal government’s “war on poverty” begun under President Johnson was increasing in costs over the years. The federal government formed the Office of Child Support under the Reagan administration which worked on Child Support GUIDELINES (developed in 1987) to be given to states with a mandate that they have a system in place to ensure working non residential fathers were financially supporting their children to reduce the monetary impact to benefits paid out of federal coffers. As an incentive to comply (passed in 1988) the federal government tied payments to the states with a deadline of 1989, a scant one year to comply or lose $$. (See “Child Support Reform” for current incentive payments to states and “Parents; Declare Your Independence” for the unconstitutional nature of child support)
Prior to the guidelines state courts were free to set child support payments based upon a showing of need, a “Costs Shares” Model which allowed both residential and non residential parents to share in the actual costs of raising the child. Income transfers from one parent to the other were minimal and usually occurred as an exchange when the non residential parent was exercising their parental time with the children, an incentive to both parties to pay and allow access pursuant to the court order. A non residential parent could be ordered to pay expenses directly, such as medical insurance coverage or costs or school extra curricular expenses.
The Guidelines sent out by the federal government, however, were an “Income Shares” Model, a set percentage of income with an increasing sliding scale upwards based on the number of children. As it is a fixed percentage dependent on quantity it is an excise tax and an income transfer, with the government as middle man, from one parent to the other. The model is flawed as it presumes the custodial parent makes the payments benefitting the children directly and it transfers the money from the non custodial parent to the custodial with no accountability for the custodial parents child expenses actually paid. Further, it has no relationship to the actual cost of raising a child in that state or the costs based on actual circumstances of the child. The guidelines themselves were derived from income and expense models for intact families and thus ignored the real world economics of maintaining two households for the children. Health care, child care, and extraordinary expenses are added on after the income transfer is set, thus skewing the percentage even higher.
It should be noted that the Income Shares submission from the feds to the states was a guideline and states were free to modify, change, or put into place any plan, but the short turn around (enactment 1988, deadline 1989) and the fact that ALL states had guidelines in place on time indicates the states just enacted the guidelines generally as proposed. The federal governments own studies on enactment showed the states did little more than quick reviews, minor changes and enacted the guideline as a mandate. This simply to maximize the states reimbursements $$ from the federal government. For New York State the income transfer amounts were set at 17% for one child, 25% for 2, 28% for 3, etc. and were based on GROSS income plus add ons and a expenses based on pro rata income of the parents.
1st Rule of Accounting; Net Income = Assets – liabilities.
Using general numbers we can break down the actual cost for a custodial parent and a non custodial parent who has the standard NY visitation order of every other weekend and one day mid week for 4 hours with 2 children. Assuming a $16 an hour 30 hour work week for CP and a $24 an hour 40 hour work week for NCP, rounded numbers and general tax bracketing.
- Custodial Parent 2. Non Custodial Parent
Gross Income (after FICA) $25000 $50000
Federal Tax – $0 -$11000*
State Tax – $1250 – $3250
Federal EITC + $6444 + 0
After Tax Income $30194 $35750
Medical Insurance Premiums $0 – $7500
Child Care Expenses – $3467 – $6933
Extraordinary Expenses – $670 – $1330
Excise Tax Income Transfer +$12500 – $12500
Net Income CP $38557 NCP $7487
Tax Freedom Day 0 days – January 1 213 days – August 1st
*This is filing status single for the NCP and Head of Household and both child deductions for the CP. If an agreement in the order is in place NCP may be able to file head of household with one child exemption but it is not guaranteed (abt $2000 reduction). NCP medical insurance cost shown is increase due to keeping a family plan to carry the children, cost of single plan deducted from both. Child care expenses are set by CP and beyond NCP’s control, even if NCP has available kith or kin care for free and lacking a “right of first refusal” for care of the children specified in the order. Extraordinary expenses are dental (braces), eye care, etc. and again the choice of provider and expense levels are controlled by the CP.
In NYS there is no set proportional offset for time with the children. On the remaining $144 a week net income the NCP needs to ensure adequate space for children during parenting access time. It is plainly apparent the NCP will have to seek extra work and income to survive thus reducing the time available to interact with the children. Additionally, increased income may result in the court revisiting the order and increasing the child excise tax based on higher income.
Once income is set, any reduction is considered a voluntary reduction in income and income levels can be imputed and set at the higher level. The child excise tax is an order for the employer to deduct and is taken out before net pay (just like the other taxes) leaving the NCP the take home pay. Should a NCP be assessed a child excise tax which results in garnishment of greater than 65% of his gross income, the level of deduction is capped HOWEVER, the amount is still owed and is added to the NCP’s arrears which, when hitting certain levels results in automatic suspension of drivers licenses, seizure of registered automobiles, suspension of professional licenses, and even incarceration. Loss of driving privileges or professional licenses, and even involuntary incarceration for the non payment of the child excise tax is considered a VOLUNTARY reduction in income and the assessment still accrues and adds to the arrears during this time.
Taxation without representation?
It’s important to note here that the NCP never financially abandoned their children and there was no clear and convincing evidence that being a “non custodial” parent would lead to them NOT financially support their children in the future, a clear violation of parental rights and the strict scrutiny standard for government to intervene. The limited time “visiting” with the children, against the wishes of the NCP, is further violation of the individuals constitutionally protected parental rights. Worse, the transfer of income has an inverse action on time with the children for as the income transfer increases the ability to spend time with the children decreases. Taxation without representation.
Stripped of our children without our consent. Without our consent, taxed for the violation of our right. Our petitions for redress of these grievances answered only with more injury. Given the assault upon out natural, God given parental rights, by a government which is supposed to be protecting those parental rights, one does wonder when the tea will hit the harbor.