An Evaluation of the Relationship between the Percentage-of-Income Standard and Family Expenditures for Children

Two questions have been raised about the percentage-of-income standard used in Wisconsin to determine the size of child support awards. First, does the standard, which takes a fmed percentage of gross income, require upper-middle-income absent parents to pay a larger portion of their after-tax income to child support than is the case for lower-middle-income absent parents? Second, does the Wisconsin standard require upper-middle-income absent parents to pay more than their fair share of child costs? An analysis of micro-level data from the 1982-83 and 1984 Consumer Expenditure Survey indicates the answers to both questions are negative. No significant differences were found in the average tax rates of lower-middle-income and upper-middle-income parents. It is possible that if social security taxes and sales taxes had been included in the study as well as income and property taxes, the results would have indicated that upper-middle-income parents face even lower average tax rates than their lower-middle-income counterparts. So basing the Wisconsin standard on gross income rather than net income does not penalize upper-middle-income absent parents. It was further found that although, on average, upper-middle-income parents spend a smaller percentag