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Child Support - Percentage of Income model

The Percentage of Income Model

      [1] Calculation of Support Under the Percentage of Income Model

The percentage of income model sets support as a percentage of only the noncustodial parent's income, either gross or net.60  A percentage of income guidelines does not consider the custodial parent's income; the standard assumes that each parent will expend the designated proportion of income on the child, with the custodial parent's proportion spent directly.

There are two main variations on the percentage of income model: the flat percentage model, and the varying percentage model. Under the flat percentage model, the percentage of income devoted to child support remains constant at all income levels.61  Under the varying percentage model, however, the percentage of income devoted to child support varies according to the level of income. Like the income shares model, the support award decreases as a percentage of income as income increases. Under either variation, the percentage to be applied is determined by the number of children and, in some states, by the ages of the children.62 

The calculation of child support under a percentage of income approach is basically a three-step process:

1. The noncustodial parent's income (gross or net) is determined.

2. The basic child support order is determined by applying a percentage to that income.

3. Adjustments are made for add-ons and deductions to reach a final presumptive order.

For example, suppose child support must be determined for one child whose custodial parent has a gross income of $1,000 per month and whose noncustodial parent has a gross income of $2,000 per month. Child care expenses are $50 per month, and extraordinary medical expenses are $15 per month. (For ease in calculation, assume that health insurance is paid by the father's employer, and there are no pre-existing support orders for child support or alimony.)

In this case, all that must be done is apply a percentage contained in the statute to the noncustodial parent's income, and then include the add-ons and deductions.

Using the Wisconsin child support guideline,63  the calculation of child support would be as follows:

(1) First, determine the noncustodial parent's income. In this case, it is $2,000.

(2) Determine the appropriate percentage. For one child, it is 17%. Thus, the basic child support obligation is 17% x $2,000, or $340.

      [2] Strengths and Weaknesses of the Percentage of Income Model

The flat percentage of income model does not incorporate the principle that as income increases, the percentage of income devoted to child care decreases. Rather, the flat percentage of income model applies the same percentage to all income.64  The varying percentage model, however, does incorporate the principle that as income increases, the percentage of income devoted to child care decreases. The strength or weakness of each variation of this model, therefore, will depend on the correctness of the underlying economic assumption that the percentage of income devoted to child support remains or does not remain constant throughout all levels of income.

Additionally, some flat percentage of income states have chosen to set a cap on child support at the highest income levels. Under this cap, there is a point of income for the noncustodial parent beyond which child support will not presumptively continue to rise.65  Thus, even under the flat percentage of income model, at the highest levels of income, the percentage of income devoted to child support is lower than at the lowest levels of income. Thus, the percentage of income model mimicks the income shares model in its most distinguishing feature.

Proponents of the percentage of income model argue that both parents are assumed to contribute to the child's upbringing in the same proportion as the obligor.66  The custodial parent is making the contribution in the manner he or she would have made had the parties not divorced. Thus, there is no need to adopt a more complex formula.

Proponents of the percentage of income model also argue that the percentage of income model is simpler. It is easier to learn, easier to explain, easier to computerize, and less prone to error.67  Because one of the goals in adopting guidelines is ease of use, this argument is not without merit.

Many have argued, however, that it is inherently unfair for the custodial parent's income not to affect the presumptive amount. Under the percentage of income model, only a large disparity between the custodial parent's income and the non-custodial parent's income will serve as a statutory factor upon which to base a deviation.68  The failure of the percentage of income model to consider the custodial parent's income, however, may be balanced out by the model's failure to ever impute income to the custodial parent as well.69 

Opponents of the percentage of income model also argue that states that have adopted the percentage of income model generally do not take into consideration adjustments for child care, extraordinary medical expenses, shared or split custody, serial family development, or, most significantly, extremely high or low custodial parent income. Thus, while the percentage of income model has the advantage of ease of administration, where such commonly occurring factors need to be dealt with as deviations rather than part of the formula, the goal of consistency and predictability is lost. Further, where deviation becomes the norm, the goal of perceived fairness is lost as well.

 


Footnotes

60 See § 2.03[c]. (back)

61 For example, Alaska Civ. R. 90.3, Committee Commentary, Sec. II, states, "Rule 90.3. employs the percentage of income approach. This approach is based on economic analyses which show the proportion of income parents devote to their children in intact families is relatively constant across income levels up to a certain upper limit." (back)

62  See § 3.05[a]. (back)

63  Wis. Admin. Code (HHS) § 80.01 to 80.05. (back)

64  The flat percentage of income model is based on economic data at odds with that of Thomas Espenshade that suggests that the percentage of family income devoted to child expenditures is fairly constant. See D. Dodson, A Guide to the Guidelines, 10 Fam. Advoc. 4, 7 at fn. 2 (1988). (back)

65  See, e.g., Alaska Civ. R. 90.3. (back)

66  R. Williams, "An Overview of Child Support Guidelines," Child Support Guidelines: The Next Generation, at 7 (U.S. Dep't of Health and Human Services, Office of Child Support Enforcement, 1994). (back)

67  I. Garfinkel & M. Melli, The Use of Normative Standards in Family Law Decisions: Developing Mathematical Standards for Child Support, 24 Fam. L.Q. 157 (1990). See Eklund v. Eklund, 538 N.W.2d 182, 187 (N.D. 1995) (discussion of advantages of percentage of income model). (back)

68  The federal regulations concerning child support guidelines do not require factoring in the custodial parent's income to compute a presumptive child support award. The federal rules merely require the state guidelines to take into consideration all earnings and income of the noncustodial parent. 45 C.F.R. § 302.56(c)(1). See § 4.07[d] concerning disparity in income as a deviation factor. (back)

 

Keywords: - child income model of percantage support

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