Basic Child Support Obligation “The Economic Table”.ppt

Basic Child Support Obligation“The Economic Table” Presentation to the Washington State Child Support Working Group November 2007 Overview of Presentation Morning Session: The Mathematics of the Income Share Model The Basic Child Support Obligation (BCSO) or Economic Table What is it? How is it constructed? Comparison of Washington’s BCSO to Alternative Tables Afternoon Session: Estimating Spending on Children (Engel, Rothbarth, USDA) Data Used in the Estimates (Consumer Expenditure Survey) How can we use the alternative estimates to inform our decision? Preliminary Comments I don’t know how Washington’s current economic table was constructed. Examining what parents spend on their children is an empirical question even though fundamentally it is thought to be a moral question of how parents share their resources with their dependents. Divorce in economic terms reflects the loss of the economies of scale in consumption gained from having only one household. At least one of the newly formed families will have to be worse off unless additional resources are acquired by the two households. The Income Shares Model is a normative standard for support. It is a statement of what should be done for the children. Income Share Model Statement One: The combined obligation of both parents to their children is to provide financial support equal to what they would have spent on the children had the family remained intact. The parents shall share this combined obligation in proportion to their income. Statement Two: The children are entitled to a level of support equal to the percentage of each parent’s income that they would have received if the family remained together. The Algebra of Income Shares Alternative View Share of Parent’s Income Spent on Children IllinoisPercentage of Income Number of Children % of Net Income 1 20% 2 28% 3 32% 4 40% 5 45% 6 or More 50% Central Question What would have been spent on the children if the family remained intact? S