Step Parenting Part 4.5 - More on Money

CompletelyBrunette did a great job of representing the rest of the story. The core problem with child support orders, at least in Wisconsin, it they have no basis on what it actually costs to raise a child. There is a very general assumption that every family, regardless of income, pays a fix percentage of their gross income to raise 1, 2, etc. children. This is only true in a narrow range of cases that typically involve both parents earning a decent income. Furthermore, the difference between 1 and 2 or 2 and 3 is slight because they assume most of the cost is the same regardless of who many children one has (for example, you might by a larger house or car when you have one child, but you typically don't upgrade again with your second). It doesn't represent the fact that a son and daughter might cost more than two sons or two daughters who could share a room and hand down some clothing and toys. Whether or not it covers the cost of putting 2 children in daycare versus one is completely dependent on the payor's income.

I had actually forgotten Wisconsin's new law about a decreased percentage for higher income payors (sorry, it never actually applied to us), but I do recall that getting a raise is not an acceptable reason for the courts to modify your support order. It would only be taken into consideration along with a significant change in circumstance or an initial support order. For that reason, I'm going to stick with numbers I know just for the sake of easy examples. Also, before I get to examples, there are a few common misconceptions I want to clear up:

1. The percentage of income support rule in Wisconsin is an assumption based upon the joint gross income of the parents before the divorce. This remains true after the divorce. The parent with primary placement of the children will be the recipient of child support but it is also assumed that parent is contributing the same percentage of their own income toward raising the children. The state, right or wrong, does not assign a monetary value to the services provided by the primary caregiver. Therefore, if the parent of two children with primary placement earns $40,000 annually and the parent paying child support earns $60,000 annually, it is assumed that $25,000 per year goes toward raising the children even though child support only totals $15,000 per year.
2. The full cost of a larger house or car can not be used to calculate the cost of raising children. Only the difference between what you would have without children and what you have with children can be considered. In my case, for example, I've driven an SUV since before I was married. I continued to drive an SUV for years after I had my son. There was no additional automobile cost associated with having a child other than the extra fuel needed to drop him off at daycare each day.
3. Most people who pay child support have other monetary obligations beyond the monthly payments. In our case for example, in addition to a fixed percentage order, my husband is also responsible for health insurance coverage plus 50% of all uncovered medical expenses such as prescription copays, deductibles, orthodontia, glasses, etc. A particularly interesting situation arose when he was asked to pay 50% of the full cost of dental services because his ex didn't like any of the dentists covered under the insurance coverage he had. The court order didn't actually state that she had to take advantage of the insurance coverage he provided, only that he had to provide it and pay half the cost of medical services not paid for by it.
   
4. There is very little correlation between child support and visitation. Some adjustments are made when the payor has the children on a fairly regular basis (for example, 2-3 nights each week instead of every other weekend), but beyond that there are no dependencies. What I'm getting at is that a parent does not have to right to withhold child support if the other parent withholds visitation rights. Likewise, withholding visitation is not an appropriate response to unpaid child support. Doing this is adding insult to injury on the children.

Back to CB's point about what it costs to raise children. Consider two scenarios based upon a simplified version of WI law - I'm going to use my neighbors as examples because they demonstrate the concepts well, but in real life they are happily married.

The first neighbor has a situation similar to the one CB was in that only one parent works outside the home. The mother owns her own business and the father is a stay at home dad. If they were to get divorced and he was awarded primary placement, she would owe him 25% of her income. Note that this is not a percentage of her company's revenue. Technically, he could request a percentage of the profit, but seeing as how she is in the business of investing money, I'm sure she is aware of many ways to maintain a decent standard of living while reporting a fairly low income and profit margin (providing herself with a company car, for example, would give her a free car and a business expense to write off). I would put the value of their home between 3/4 to a full million and their children attend private schools. The odds of him being able support anywhere near that same standard of living on a quarter of her income are slim to none.

Down the road is another set of neighbors. She is a successful mortgage broker. He attempted self-employment several times and it never really got off the ground. They don't actually have kids, let's pretend they do. Let's say she makes $100,000 a year and he makes $20,000. If they got divorced and she won primary placement of the children, he would owe her $5000 per year for two kids (total cost to raise the children would be assumed as $30,000 per year). A 25% drop in his income equates to a 5% increase in hers. The addition of $5000 to her income probably has minimal impact in terms of the standard of living she can provide. He, however, must support himself on $15,000 per year. Fair? Yes, because I still believe he is legally obligated. What if he was a really nice guy and she dumped him for some doctor who made $200,00 per year? Doesn't matter because the state doesn't care about circumstances.

And we'll use the people across the street for my last example. They are both attorneys and just built and moved into a gorgeous home. They have two little boys. Lets say for kicks that they each earn $200,000 per year. It would be assumed that they spend $100,000 per year raising their children. If they got divorced, you would have one parent with the children living on $250,000 and the other living on $150,000. Great for them, right? Sure, but when you compare their situation to the ones above, you can see the problems that accompany a pure percentage based support order.

The unfortunate truth, however, is that I don't have any ideas on how to fix it in a way that is equitable to everyone short of suggesting that you either wait until you are mature enough to make a good decision about a spouse (??? age 70???) or don't get divorced until the kids are 18.