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Vs. Income Shares |
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Thirty-seven states employ some form of the Income
Shares model for child support awards. There are a number of large
differences between the 
and Income Shares models. The major areas of difference are
the underlying cost tables and the method of allocating those costs
between the parties.
Income Shares is not a cost based guideline.
As noted in many publications on this site (see below), the Income
Shares guideline table is based on an indirect estimate of child
costs using a Rothbarth estimation technique. This is an economic
method developed for determining the income necessary for families
of different sizes to have the same standard of living, which only
has a little to do with child costs.
Specifically, child costs are determined by comparing
when families with and without an additional child spend the same
amount on specific adult goods – the current version
of Income Shares uses adult clothing. (An earlier version, from
the early 1990s and still used by many states, was based on comparing
differences in total spending on adult clothing, alcohol, and tobacco.)
The difference in total household spending is taken as child costs.
For example, suppose a childless couple spends
$20,000 a year on total consumption and $2,000 annually on adult
clothing. After having a child the couple reduces its spending on
clothing (and other things) to spend on the child. When the couple
has sufficient income to boost spending back up to $2,000 for adult
clothing, what is total household spending? If total household spending
is $30,000 the spending on the child is considered the difference
between the two total spending amounts – $30,000 minus $20,000
= $10,000 for yearly child costs.
A critical flaw is assuming that when a couple
has a child their household has the income to boost spending to
the $30,000 level when they still have the pre-child income.
There are many flaws in the Betson calculation
that lead to over-stated child costs. There are also no components
that can be used in rebuttal. You cannot say, “The presumptive
amount assumes $x spent on education, and we have to spend $y.”
This violates the federal requirement that presumptive awards be
rebuttable, or highly contributes to the need of an economist to
make a rebuttal.
uses actual spending data on children to reflect out-of-pocket expense.
Most child cost category data come from the U.S. Department of Agriculture
for single-parent households. However, the USDA uses per capita
costs for housing which exaggerates child costs. Therefore,
uses housing cost data from the U.S. Department of Interior. The
one child cost is the difference between a one-bedroom and a two-bedroom
house plus utilities factored in. Ratios are then applied for additional
children and different income levels.
So the underlying cost table is determined very
differently.
results in a realistic cost table while Income Shares includes hidden
money of benefit to only the custodial parent.
Allocation is different. The
methodology allocates child costs by income available above
self-support. This allocation is also used for add-ons:
The award cannot reduce the payor below a given income level (self-support).
Income Shares is vague on this. Also,
treats child tax benefits as a negative cost, and these tax benefits
are large. Income shares ignores offsets from child-related tax
benefits which means the non-custodial parent pays a second time
for what the government has already given the custodial parent.
Finally,
allocates costs by which parent incurs them, notably important for
pro-rating for parenting time. The pro-rating starts with any
parenting time, necessary for the equal protection criteria to be
met.
Income shares violates equal protection standards
by not treating the non-custodial parent equally. Usually, awards
do not reflect non-custodial child costs until 25 - 30% of the child's
time is with the NCP. But when that is reached, total child costs
are suddenly adjusted up by 1.5 before pro-rating by time.
This is incorrect accounting. There must be an
account of costs for each parent, and the other parent should share
in those costs in proportion to any amount of time. When there are
fixed costs, this accelerates the reversal of the flow of child
support on an equal protection basis. Based on fixed costs
in both households (for the child), any “multiplier”
(a badly flawed concept) would wind up as less than 1, not 1.5 or
so. For equal treatment there should be no multiplier, but an account
of costs for each parent.
is the only guideline that meets equal protection standards, for
the parents and the children. Income Shares has a built in biases
and leads to child support awards often double or more what they
should be if based on professional economic standards.
Critiques of the Income Shares
Child Support Guideline
Memorandum
from Richard J. Byrd to  Virginia
Quadrennial Guideline Review Panel Regarding Analysis of PSI Study
and Recommendation, May 26, 1999. [HTML]
A blunt critique of the Income Shares
method and definition of child costs. Also available in
MSWord.
The
Cost Shares Child Support Guideline – A Common Sense and Economics
Based Improvement Over the Income Shares Guideline. PDF
Policy Studies, Incorporated of Denver, Colorado
submitted “Economic Basis for Updated Child Support Schedule”
to the Commonwealth of  Kentucky,
September 1, 2000, to present their usual reasoning behind Income
Shares. This is R. Mark Roger’s rebuttal, submitted to the
same government body February 7, 2001, in which the “economic
basis” is challenged.
“Wisconsin-Style
and Income Shares Child Support Guidelines: Excessive Burdens and
Flawed Economic Foundation,” [PDF]
by R. Mark Rogers, Family Law Quarterly,
Spring 1999, pp.135-156. PDF
The
Father of Today's Child Support Public Policy, His Personal Exploitation
of the System, and the Fallacy of His “Income Shares”
Mode. [MSWord]
by James R. Johnston, August 1998.
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