Joseph S. Crane
Chairman of Child Support Review Panel
730 East Broad Street
Richmond, VA 23219
Dear Mr. Crane,
As you are aware I have been following the progression of the panel meetings very closely and have attended every meeting to date.
I feel I must bring to your attention once again the flawed logic / economics that the panel continues to use with regards to the effects of tax benefits on the child support guideline amount. As stated by Mr. Brownfield at the August 1 meeting, tax consequences are the overwhelming majority of the complaints of non-custodial parents, but yet the panel continues to minimize the effects of taxes because of the incorrect method of incorporating them into the guidelines.
Certain members of the panel continue to portray the effects of taxes as minimal, even after a presentation was given by Mr. Mark Rogers, on the correct economic method of incorporating the tax effects into the guidelines. Mr. Rogers clearly showed that the tax effects can be and are significant in most cases.
The majority of the members are being Misled by a few who propose that the effects are minimal because they want to continue to add the tax benefits back to gross income before determining the guideline amount. This incorrect economic methodology does in fact result in minimal differences. However, one must recognize that this method is totally flawed.
Mr. Rogers demonstrated in his presentation and in his handout that the correct economic procedure for dealing with the tax effects given how the guideline numbers have been derived is to compare a person’s tax liability without the associated tax benefits and with the tax benefits. The difference being the annualized tax savings as a result of the benefits. This difference is then divided by 12 to get the monthly savings ( cost offset ) to the ( child cost / table amount ) prior to allocating proportionately between the parents.
With all due respect to the members of the panel and their expertise in their respective fields, this one example alone gives credibility to the concerns of many across this country that there is a problem associated with the composition of the panel members. Members of this panel ( similar to those in GA ) are not properly qualified by education, background, and experience to accurately access the economic and financial intricacies of the guidelines. Certainly there is a place for these members on the panel, but would it make sense to have economists, accountants, and finance professionals evaluating laws? Of course not, so why does the State of Virginia think it makes sense for non-finance professionals to evaluate the economic and financial intricacies of the guidelines.
I have read in previous reports and heard a majority of the members of the panel state that they have no real understanding of how the guidelines were derived and/or what makes up the guidelines, nor do they fully comprehend taxes. I have also personally witnessed the members struggle with taxes even after a being given a presentation and handouts by a CPA.
Allowing parents of Virginia to be subjected to guidelines that even members of the panel are not qualified to assess does a great injustice to our state and the principles upon which this country was built. From someone with a financial background, I can tell you that the panel process of evaluating the guidelines would be given a failing grade in any academic setting and/or private sector.
Chase Shifflett