How To Fix The Economy With Child Support Reform
12/8/2011, 3:59 p.m.
Now, I know what you are thinking...what about the individuals that do not get paid with a paycheck and own businesses....I am glad you asked! Those individuals will be required to pay their Child Support under the current guideline in the state he/she lives, but he/she will be able to list the custodial parent as an employee within their business and receive the same tax breaks any business would receive for hiring someone. By law, the non-custodial parent is also required to provide health insurance for the child they are required to pay support for, so listing the custodial parent as a tax-exempt employee will increase company savings and could result in hiring an additional worker and/or increase revenue to be place back in the economy under the Hiring Incentives to Restore Employment (HIRE) Act for businesses.
Individuals required to pay Child Support should have the option of how that support should be administered to the custodial parent. Option #1 is to remain in the current system in which funds are transferred into the account of the custodial parent and the funds are not regulated or monitored and disbursed at the discretion of the custodial parent. Option #2 would be for the non-custodial parent to pay a monthly fee to a credit card company for a Child Support Credit Card. The sole responsibility of the Credit Card Company is to track expenses through approved vendors selected by both the custodial parent and the non-custodial parent. If the card is used by a vendor not listed and/or approved by both parties the transaction is declined. For example, if Best Buy is not listed as an approved vendor the card will be declined at the point of service.
So, how does this help our economy....I am glad you asked. The Credit Card companies are making money off the fees for utilizing the card, resulting in increased revenue and hiring workers to service the division. The government and lawyers make money because if the parents can't agree on a vendor the services of the both will be needed to moderate the dispute. The vendors will have an assured customer and will not need to worry about the custodial parent not being able to pay for services related to the child because he/she used that money to buy another item. The non-custodial parent has a feeling of empowerment since he/she is involved with what the money is utilized for. The non-custodial parent can also use the transaction records to defense against custodial parents requesting support increases when they are not warranted (i.e., Why do you need an extra $200 per month if the expenses associated with the child have not increased?). In cases of emergency, a set amount of cash can be withdrawn from the card via an ATM on a monthly basis.
Since Child Support guidelines are regulated at the State level, the federal government can implement federal tax reform by implementing tax guidelines which state that all tax events related to the child resulting from Child Support payments (i.e., claiming child on taxes, child care costs, healthcare costs, mortgage interest, etc.) should be claimed by both parents on alternating years (even year for custodial parent...odd year for non-custodial parent). Since the government does not allow for both parents to claim the child, but requires the child to be supported; the same would be for claiming the child on each parent's taxes in alternate years. If the custodial parent, who is receiving support, is approved for a mortgage and one of the reasons that individual was approved for the mortgage is because Child Support payments were listed as income; the non-custodial parent should be able to claim that mortgage interest based on what percentage the child support was used to determine the loan. For example, mortgage interest paid for the year is $1,000.00 and Child Support accounted for 15% of the income to expense ratio equation the bank utilized to grant the loan. The non-custodial parent should be able to claim $150.00 (15% of $1,000.00) on his/her taxes. By law, the financial institution approving the loan would be required to notify the non-custodial parent if his/her Child Support payments are listed as income.