Maryland Legislators Seek to Jack Up Child Support Levels, Based on Bogus Inflation Rationale

A bill, SB 252, was just introduced in Maryland to increase child support obligations for households at most income levels–a massive increase of nearly 30 percent for a couple with one child making $3,400 a month!  Maryland residents, already burdened by recent state tax increases, now face additional burdens.

I don’t live in Maryland, and I’m not divorced, so I won’t be affected by the bill.  But as a lawyer who has studied most states’ child support guidelines, I find the economic ignorance behind the bill infuriating.

The bill is based on the bogus rationale that child support awards must go up, because inflation has increased child-rearing costs over the years.  But under Maryland’s existing child support guidelines, child support awards and obligations are based on income–the more you make, the more you pay!  So when incomes and prices rise due to inflation, so, too, do child support payments.  The guidelines thus contain a built-in inflation adjustment.

Yet some Maryland authorities apparently do not grasp basic economics, arguing that “today’s child support levels” are too low because they “are based on the economic realities of 1988, when a gallon of gas cost $1.08 and a first-class stamp was 22 cents.”

Wrong.  Child support levels are based on what payors earn now, not what they earned in 1988 – when incomes in dollars were much lower.  As Murray Steinberg, a former member of Virginia’s child-support review panel, noted, wages have gone up faster than inflation since 1988, meaning that child support levels have risen along with inflation, rather than being eroded by it.  (Steinberg cited publicly-available wage and inflation data from the Bureau of Labor Statistics proving this. See, e.g., Bureau of Labor Statistics, Employment Cost Index, Constant Dollar, June 1989=100 (April 29, 2005).) (Available at http://www.bls.gov/web/ecconst.pdf.  I used to work at the BLS producing federal labor cost and living cost data.)

The same false argument was unsuccessfully made in Virginia.  But its legislature wisely saw rejected it, and voted down a failed rewrite of Virginia’s guidelines based on this theory in 2006, rejecting a child support increase bill known as HB733.

Moreover, some child-rearing costs that rise the fastest with inflation – like “health insurance expenses” and “extraordinary medical expenses” – are awarded as statutory “add ons” on top of  the “basic child support” award, preventing their inflation from eroding the sufficiency of child support levels.  See Bureau of Labor Statistics, “Table 1A, Consumer Price Index for All Urban Consumers” (available at http://www.bls.gov/cpi/cpid04av.pdf) (medical inflation outstrips inflation in general). This offsets the fact that payments under the “basic child support obligation” schedule rise at a diminishing rate relative to income at the upper portions of the child support schedule.

Maryland’s guidelines are not inadequate.  They greatly exceed the true cost of raising children, and amount actually spent on raising children, for the vast majority of households making above $30,000 a year (and also for those households making less than $30,000 a year in which there are substantial court-ordered daycare payments awarded pursuant to Md. Code Section 12-204(g)).  Indeed, Maryland’s guidelines were historically above average for the nation, although that edge may have dissipated in recent years as some other states have jacked up their guidelines based on similar bogus inflation rationales.  (See, e.g., Ronald K. Henry, “Child Support At A Crossroads: When the Real World Intrudes Upon Academics and Advocates,” 33 Family Law Quarterly 235, 241 fn. 20 (1999) (lawyer notes that Maryland child support levels are above the national average, citing the example of a child support obligor with an income of $1000 per month).)

The bill would increase child support obligations so much that working-class fathers would end up paying more in child support than much wealthier families actually spend on their children.  I am a lawyer, and my wife is an accountant by occupation.  But we spend less on our daughter than the proposed child support guidelines would require many working-class non-custodial parents with much lower incomes to spend.  Households with a monthly income of $3400 have a higher “basic child support” obligation under the bill–not counting statutory add-ons–than I and my wife actually spend on our daughter, who has plenty of toys, games, food, and clothing.  (And that’s true even if our child-care costs are estimated at the maximum reasonable amount, such as by attributing to our daughter a per capita share of the amortized cost of our cars.)

(Ironically, the bill, while increasing child support payments at most income levels, would actually cut them for certain very low-income households, where child support payments actually come closest to matching child-rearing costs.  It increases the guidelines where they are most excessive now, and cuts them where they are least excessive.  “‘We’re reducing at the low end where it’s needed the most,‘ said Del. Benjamin F. Kramer.”  While I do not think that Maryland’s existing child support levels are too low even at the ”low end,” and would not object to a modest reduction there, it is odd to cut them only at the very low end while increasing child support awards everywhere else, even where existing awards grossly exceed the actual amounts actually spent on raising children by typical parents at that income level.)

State child support agencies like to boast of increased child support collections.  There are two ways for them to do that.  The easy way is to increase child support guidelines to jack up the payments imposed on law-abiding people who already pay their child support in full.  The hard way to do it is to make people who don’t pay what they owe now (many of whom are poor and have difficulty paying) finally pay up to support their children.  Maryland officials seem to have chosen the easy way out, at the expense of their citizens, and economic reality.

Previously, I wrote about a bill in Virginia, which will probably die, to sock divorced parents with discriminatory burdens.  Earlier, I discussed how divorce law increasingly harms veterans and small businesses, and the peculiar economics of divorce.

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