An Inclusive Child Allowance Would Strengthen the Public Child Support System

March 24, 2021

According to Senator Marco Rubio (R-FL), an inclusive child allowance will “destroy the child-support enforcement system as we know it.” American Enterprise Institute’s Angela Rachidi, who also opposes an inclusive child allowance, says it would “weaken the Child Support Enforcement program” and “threaten the relationship between noncustodial parents and their children.” These claims are alarming but false. 

If anything, a well-designed, inclusive child allowance program, the kind that is normal in most other rich countries, would reduce the financial pressures that too often set struggling parents at odds. It would also make it easier to improve the current public child support system to work much better for struggling parents and strengthen family bonds, including cooperative bonds between co-parents who live apart, and emotional bonds between noncustodial parents and their children.

How Child Support Works in the United States

To understand why claims like Rubio’s and Rachidi’s are so off base, it’s helpful to understand how child support currently works in the United States. In cases where a child has two parents who do not live together, the parent residing apart from the child is generally legally obligated to pay child support to the parent who is residing with the child. (Increasingly, children whose parents do not live together spend substantial or equal time living with each of their parents, but even in these cases, one parent is often obligated to pay child support to the other parent.)  When married parents split up, a child support court order is typically established in divorce proceedings. When unmarried parents split up, it is typically established in a custody and child support proceeding that may or may not include other related issues. 

While most child support arrangements involve formal court orders to pay a specific sum each month, informal agreements on child support and related parenting issues are also relatively common. Among the roughly 7 million custodial parents who say they have no legal child support agreement, reasons given for not having an agreement include: not feeling the need to have a legal agreement (39.1 percent); believing the other parent provides what he or she could for support (38.1 percent); and, thinking that the other parent could not afford to pay child support (29.6 percent).  

Public child support services help parents establish child support court orders and collect the child support owed to them. For parents who want to establish a formal child support order, the public child support system provides largely free public services on a universal basis to all eligible parents. There are no means-tests for services and only very modest fees for some services. 

Under Title IV-D of the Social Security Act, the federal government pays for more than two-thirds of costs of public child support services, with most of these services being delivered by state and local governments. In 2019, about $27 billion in child support was paid to families through this public system. The vast majority of this support (about $24.5 million) was collected through automatic wage withholding. The employer sends the withheld amount to the state, and the state disburses it to the parent.  

TANF’s Unusual Relationship with the Public Child Support System

If neither of a child’s parents wants to use the public system to establish a formal child support order, the government cannot force them to do so with one notable exception: a parent living with a minor child applies for Temporary Assistance for Needy Families (TANF) monthly financial assistance must apply for public child support services and must transfer to the state any legal rights they have to child support from another person. In the vast majority of cases, the parent applying for TANF assistance is the child’s mother, who is required to transfer to the state any legal rights to child support from the child’s father. 

If there is no court order in place directing the noncustodial parent to pay child support to the custodial parent, the state will sue the other parent for child support. The parent applying for TANF has no say in the matter and must help the state with its lawsuit against the other parent, including by naming the other parent, providing other information the state demands, and appearing at interviews, hearings, and legal proceedings. There are some narrow “good cause” exceptions for parents who don’t want to cooperate with the state, but these are mostly related to physical health or safety of the parent or the child, and rarely granted. 

If a court has ordered one of the parents to pay a fixed amount of child support each month to the other parent, the state will seize any child support paid while the child is receiving TANF assistance and use it to “reimburse” itself for the financial assistance provided. TANF is the only federal program providing benefits to children that has this kind of sweeping mechanism that seizes funds from parents to reimburse the state for benefits provided to children. In some state TANF programs, a portion of any child support paid (typically up to $50 a month) will be paid to the child (“passed-through”) and not counted (“disregarded”) in determining the child’s TANF eligibility and benefit amount. In recent years, just over $1 billion a year in child support paid by noncustodial parents has been kept by the state and never paid to custodial parents. 

TANF is a highly dysfunctional block grant program that provides monthly financial assistance to a declining number of families. Only about 900,000 families received TANF financial assistance, on average, each month in 2019. Even though TANF is a strictly means-tested program, fewer than one-fourth of eligible parents receive assistance. 

As TANF has declined, the percentage of custodial parents in the public child support system who are there on their own volition has increased, while the percentage who were forced in by the state has fallen. 

An Inclusive Child Allowance Won’t Destroy the Public Child Support System

Under the temporary expansion of the Child Tax Credit (CTC) in the American Rescue Plan and the permanent expansion of the CTC proposed in the American Family Act, none of this would change. Public child support services would remain largely universal and free, and the decreasing number of parents applying for TANF would still have to sign over their child support rights to the state. Under Senator Romney’s proposed Family Security Act, the requirement to sign over child support rights would end, but only because his bill would end TANF. 

So what’s Rubio and Rachidi’s beef? In short, their concern is that an inclusive child allowance — one that doesn’t selectively exclude mostly low-income, unpartnered parents from receiving the same benefit that is available to most other parents — will result in further declines in the number of parents applying for TANF assistance, and, as a result, fewer parents will be forced by the state to sue their child’s other parent for child support. Since parents will continue to be able to apply voluntarily for and receive public child-support services — and most parents actually receiving child support either accessed the public system voluntarily or avoided it in the first place — there’s no reason to think that an inclusive child allowance will “destroy” the current public system, as Rubio claims, or “threaten” the relationships that parents have with their children, as Rachidi claims. 

In theory, the federal government could require a solo parent who is claiming the Earned Income Tax Credit (EITC) and Child Tax Credit (or a new, inclusive child allowance) to sue the child’s other parent for child support. Proponents of such a policy would argue that it will help ensure that both parents contribute to their child’s financial support, thereby encouraging “work instead of dependency” and reducing reliance on “cash benefits” that decline as income increases. 

But according to this same logic, the federal government should also require each spouse in a married couple to meet an individual earnings test to claim the Earned Income Tax Credit and the Child Tax Credit. This policy would also help ensure that both parents contribute to their child’s financial support and thereby reduce dependence on cash benefits like the EITC. Of course, both policies would be deeply unfair to parents and children, and none of the long list of rich countries that provide inclusive child allowances impose these kinds of intrusive conditions on parents. 

Making the Public Child Support System Better

All that said, there are real problems with the current public child support system, particularly when it comes to struggling parents. As a recent important report on Maryland’s public child support system explains: 

Two decades of research present a stark picture: Unrealistic child support policies and practices entangle poor African American men and their families in poverty and have become a destabilizing force in the Baltimore community. Child support orders set beyond the ability of noncustodial parents to comply push them out of low-wage jobs, drown them in debt, hound them into the underground economy, and chase them out of their children’s lives.

A variety of reforms are needed to improve the public child support system. The most important reforms include:

  • Prohibiting states from forcing parents to sign over their rights to child support as a condition of receiving TANF financial assistance (or any existing child benefit), and ensuring that children always benefit directly when their parents pay child support. 
  • Reforming child support guidelines and policies to: (1) ensure that child support orders reflect parents’ ability to pay given labor market realities, especially for disadvantaged or working-class parents, (2) reduce uncollectible child support debt, and (3) otherwise improve how disadvantaged parents are treated in the system. 
  • For parents who opt into the public child support system, the government should ensure that they receive a minimum monthly child support payment in cases where it is not paid or paid late by a noncustodial parent. Such payments, sometimes called “child support assurance” or an “advance on maintenance,” are provided by many wealthy countries as part of their public child support systems. In a 2019 consensus report, the National Academy of Sciences included both an inclusive child allowance and child support assurance in its list of 10 policies and programs that would do the most to reduce child poverty. 

An inclusive child allowance would reduce the financial pressures that too often set struggling parents at odds. This would make it easier to reform the public child support system so it works better for all parents and children.

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