A Comparison of Child Support Schemes in Selected Countries 

History and Context

In the US, legislative responsibility for the payment of child support after family separation has been retained by individual states, though the Family Support Act of 1988 required the states to establish child support schemes that followed some very basic guidelines. Prior to this, child support awards were at the discretion of the courts, and were inconsistent, minimal, and poorly enforced. In 1996, Congress passed the Personal Responsibility and Work Opportunity Reconciliation Act, which gave responsibility for welfare payments to the states and increased child support enforcement measures.

While rates of some taxes and levels of state provision also vary between states, it is possible to broadly outline how the context of the US schemes is different from the Australian context. Cash family benefits in the US are very limited and state provision of health services is restricted to those on low incomes – provision of health care for children is therefore often a requirement of child support guidelines. There is no direct program of income support for children at the national level. Food stamps support some families on very low incomes and there are some limited tax concessions for children. Child support is often completely clawed back if the payee is in receipt of social assistance.

The US has a high rate of lone parenthood and of never-married mothers – in 2001, 26.5% of all families were lone-parent families, and approximately 40% of these parents had never married. The majority (around 75%) of single parents are in paid employment, although rates appear to be declining slightly, especially for never-married mothers.

Bases of Schemes

The variety of child support schemes existing across the states makes it impossible to describe any sort of "average" or "usual" system. We are therefore examining the schemes of three states, Georgia, Wisconsin, and Montana, which are examples of the income-shares, percentage-of-obligor-income, and Melson models respectively. We also look at California, which has a different type of scheme. The income shares model is now predominant in the US, where it is used in 35 states. The federal government guidelines include that any scheme should take account of both parents’ incomes, and increasing numbers of states are doing this explicitly; in recent years, several states have moved from a percentage-of-obligor-income model to an income-shares model or a variant thereof. Most states have a self-support allowance for the paying parent, though it is generally significantly lower than the Australian self-support amount.

Georgia

Georgia has very recently passed new legislation, which will base their child support scheme on an income-shares model, using gross income with some allowable deductions. The guidelines include tables of amounts giving basic child support obligations according to combined parental gross income. The schedule is "based on economic data which represents adjusted estimates of average total household spending for children between birth and age 18, excluding child care, health insurance, and health care costs in excess of $100 per year." Costs of contact are not included.

The parents’ combined income is located in the table and the amount for the relative number of children is split between the parents according to their relative incomes. Resident parents are assumed to meet their share of the basic amount in their care of the child. There is no separate self-support amount, but one is effectively built into the amounts in the tables. If the payer has an income below the federal poverty threshold, he or she may apply to the court for a departure from the tabled amounts.

Reasonable employment-related childcare costs, health insurance, extra health care costs, and "extraordinary expenses", such as private school fees and costs of transporting children between parents’ homes are added to the parents’ basic obligations pro rata to the incomes. Extraordinary expenses are not presumptive and must be explicitly set out by the court as a departure.

Shared care is recognised by reducing the liability of the payer according to the amount of contact, in bands as follows: 100–136 days, 10%, 137–151 days, 20%, 152–166 days, 30%, 167–181 days, 40%, and 182+ days, 50%. The reduction applies to the basic obligation as stated in the table only, not to extra costs which are still allocated pro rata on income. There is no reduction for cases where liability is calculated on the "low-income obligor" model, as the amount awarded is explicitly "below actual child costs". If the payer spends fewer than 60 days per year with the child, their liability may be increased in a similar fashion.

An adjustment made for biological or adopted (non-child support) children living with each parent by deducting an amount from their gross income as used in all calculations. The amount deducted is the same as the basic child support obligation (from the tables) for the relevant number of children if the other parent of those children does not live with the parent and children, or one half of the obligation for such children based on the combined income of the parents if they live together with the children.

For payers with obligations to multiple families, child support previously determined (for other children) is deducted from gross income. In cases of split custody, liability for each child is calculated separately and offset.

Wisconsin

In Wisconsin, liability is based on percentage of gross payer income. Some social security benefits, including food stamps, do not count towards income. The following percentages applied to the payer’s income: 17% for one child, 25% for two children, 29% for three, 31% for four, and 34% for five or more. There is no self-support component, and the payee’s income is not usually considered. Courts generally use discretion for payer incomes below $950/month (though it should be noted that they largely still make much higher awards than in similar cases in Australia) and for very high incomes.

Where both parents have shared care of at least 25% of the time, each parent’s liability to the other is calculated. The relevant percentage is applied to each parent’s income. These amounts are multiplied by 150%, to take account of the fact that it costs significantly more to care for a child in two households than in one. Each parent’s resulting amount is multiplied by the percentage of time that the other parent cares for the child, giving their liability. The amounts are offset and any balance is payable. If the resulting payer is also classified as a low-income payer, the liability may be the lower amount resulting from this calculation or from the standard (non-shared care) calculation.

Where a payer has legal obligations to children in different families, the children are put in order by dates of obligation, which are the children’s birthdays for marital children or dates of court orders for non-marital children. The amount of support due to children in the first family is calculated as normal. This amount is subtracted from the payer’s assessed income for the purposes of calculating support due to the children in the second family. The process is repeated for any subsequent families. These rules apply to all children for whom the payer has a legal obligation, that is, it includes biological children in a new intact family. However, because of the ordering process, there will effectively be a reduction for these children only where another parent has applied for support for a non-marital child after the birth of the new children.

Montana

In Montana, the Melson formula is used. It is a two-step process that allocates a basic cost of the child between the parents, and then uses the Standard of Living Adjustment (SOLA) to increases liabilities for higher-income parents.

First, each parent’s gross income, from essentially all sources is calculated. Special rules, designed to circumvent income concealment, apply to business operators and the self-employed. A personal allowance of 1.3 times the federal poverty index guideline for a one-person household, or $11,674 in 2005 (all figures in US dollars, US$1=~A$0.78), is from each parent’s income. The legislation makes it clear that this is "a contribution toward, but is not intended to meet, the subsistence needs of parents". The basic cost of the child(ren) is given as 0.3 times the parents’ personal allowance amount ($3,502) for the first child, and 0.2 times this amount ($2,335) for each subsequent child. This basic cost is apportioned betweent the parents according to the ratio of their incomes after the deduction for self-support.

The contribution required of low-income parents is calculated in a different way. Parents with an income below the self-support amount are assessed as having a liability of between 0% and 12% of their actual income; the percentage rises as income rises. In addition, parents who have an income of more than the self-support amount but who would be liable for less than 12% of their income are required to pay the greater of (a) 12% of their income or (b) the difference between their income and the self-support amount.

The purpose of the SOLA is to ensure that children enjoy the non-resident parent’s higher living standard if he or she earns more than moderate income. If the parent has income after deducting the self-support amount and their child support liability, this remaining amount is subject to the SOLA. A percentage is applied to the amount according to the number of children to be supported: 14% for one, 21% for two, 27% for three, 31% for four, continuing up to eight or more. The amount thus generated is added to the parent’s liability. Where the parent must travel more than 2,000 miles per year for contact purposes, the cost of transportation (but not accommodation or other expenses) is deducted from the amount subject to the SOLA.

For shared care cases of more than 110 days/year (30%), each parent’s obligation to the child is calculated and the liabilities offset. Where a parent has a pre-existing child support obligation to another family, this amount is deducted from their income before the new assesssment is made. Where a parent has a legal obligation to support other children not the subject of an order, whether these children live with the payer (in a "second family") or not, an amount equal to one half the basic child cost (as described above) for each child is deducted from their income.

California

California’s system uses a very complicated formula. It is not an income-shares formula because both parents’ incomes are used in calculations only where the payer has some care of the children. The payer’s liability is calculated by applying a child support percentage determined by the parents’ joint net income to the payer’s income. The child support percentage decreases as net parental income rises, by brackets, to recognise that higher-income parents spend less on children as a percentage of their income. It is 25% at middle incomes.

Where the payer has any care of the child, an adjustment is made by deducting the payer’s fraction of care multiplied by the parents’ joint net income from the payer’s income, before multiplying by the child support percentage. There is no special arrangement for more equally shared care, but the formula feeds in the percentage of care of the higher income earner twice – once to determine any reduction for the payer on the basis of care, and once in a way that affects the child support percentage, in order to recognise the increased costs where children live in two households.

Where there is more than one child, the final amount to be paid is multiplied by a factor: 1.6 for two children, 2 for three children, 2.3 for four children, up to 2.86 for 10 or more children.

There is no self-support amount, but payers with net incomes of less than $1,000/month are entitled to an adjustment according to their income. Judges can also vary amounts by discretion. Where the payee has more income than the payer, calculations are done slightly differently.

There is no automatic deduction for new children, but payers can apply to the court for special consideration on hardship grounds. If a payer if making child support payments to children in other families, the amount paid can be deducted from net income.

Outcomes

Individual states do not necessarily collect or publish figures on child support that is awarded or paid. Census figures for the whole of the US show that, in 2002, approximately 59% of resident parents were awarded child support, though many other parents report informal arrangements. The average (mean) amount awarded was was $5,044 and the average amount received was $3,160. 45% of parents received the full amount due. (As these figures are self-reported by payees, they are likely to somewhat understate the amounts, and may include in-kind support.)

Because child support awards are made by courts rather than by an administrative procedure, the process is subject to the delays and expenses of the court system. Many parents find it difficult to have their awards adjusted when their circumstances, or those of the child or the child’s other parent, change. In addition, courts appear to be reluctant to reduce awards if the payer’s income is reduced. Even imprisonment often does not result in a zero liability. These factors appear to lead to cases where payers accrue large debts that they truly do not have the means to pay, for which they are often imprisoned. It is difficult to see how this is in the best interests of children.

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