More on NH's HB 1580 - Fixing NH's child support formula is good economics

http://www.unionleader.com/article.a...5-e5a5779a6115

Fixing NH's child support formula is good economics

By MARK A. SARRO

WE ALL TEACH our children to treat others as they want to be treated. But
New Hampshire's current child support formula treats divorced parents very
differently and should be changed to get the economics right.

The current formula is broken. It ignores important economic factors,
creates winners and losers and, in turn, creates animosity and suboptimal
outcomes for children in divorced families.

The failings of the current calculation are well known: it entirely ignores
the parenting time and child costs of the paying parent and it essentially
ignores the income of the other parent. That makes it impossible to
establish a consistent standard of living for a child in each parent's
household and for each parent to be actively involved in raising their
children.

Several state commissions, task forces and advisory boards have said the
current calculation is unfair, inappropriate and should be revised to
account for both parents' incomes and parenting time. HB 1580, approved by
the House and now under review by the Senate Ways and Means Committee,
proposes to do that.

The current formula imposes an economic fiction of one parent spending time
raising a child and one parent earning income to cover the cost. It ignores
the economic reality that divorce creates two separate households, each of
which separately incurs costs which are no less expensive at one parent's
household than at the other.

As a result, the current formula imposes excessive payments on the paying
parent, who is forced by law to pay several of the same costs twice: once in
his (almost always) own household and once in the other parent's. Improving
the formula is the only way to prevent child support from being a
winner-take-all arbitrage opportunity in which the dollars really do come
before the sense.

Fixing the formula to place the same relative values on both parents'
incomes and parenting time levels the economic playing field. It gives both
parents the same economic incentives and subjects them to the same
opportunity costs and benefits. That is good economics and good public
policy because it increases the likelihood of achieving the right time and
cost allocations both within and between the separate households.

Symmetrically subjecting both parents to the same formula has several
practical benefits:

* It yields more precise payment amounts because it accounts for the
most important information affecting the time and cost tradeoffs to both
parents.

* It assures more, better, faster improvements to the formula in the
future, by aligning the risks and rewards both parents face under the
formula. If it works, everyone benefits equally. If it doesn't, everyone has
the same incentive to fix the problem.

* It improves collections because both parents know the formula is more
efficient and equitable and yields payments parents are better able to pay
because they better reflect the economic reality divorced parents face.

* It creates a higher quality of life for children by creating
opportunity for, and consistency of, parenting time and living standards
across parents' separate households.

Critics of HB 1580 argue the formula can't measure parental contributions.
It certainly cannot if it doesn't try. The current formula doesn't try. HB
1580's proposed formula does.

They also argue HB 1580 is a cookie-cutter solution. So is the current
formula. In fact, federal law requires a uniform standard. The problem is
the law presumes the current standard is correct when everyone knows it is
not.

Under New Hampshire's legal presumption of shared parenting, there is no
reason both households should not pay child costs in the same way according
to their relative incomes and parenting time. That will mean lower payments
from the current paying parent in most cases. But the magnitude of that
difference is not a deadweight loss to children. Parents' total income
available to a child, in dollars and in kind, does not change according to
how the state decides to divide it between parents. Only the household in
which that income is available to the child changes. When parenting time is
not shared, the proposed formula would not decrease the payment.

In HB 1580, New Hampshire has a chance to take a first step toward change.
Policymakers should tune out the emotion and entrenchment of the public
debate and judge the bill according to the merits of the underlying economic
principles at stake.

Mark A. Sarro is a financial economist and a principal of LECG, LLC in
Cambridge, Mass.

"marika" wrote in message
oups.com...

Dusty wrote:


HB 1580, approved by
the House and now under review by the Senate Ways and Means Committee,
proposes to do that.


i can't imagine you would get that for 1580, those all seemed like add
ons to the 1580

mk5000

Huh?? What the hell are you talking about? Get what from HB 1580??? What
add-ons??