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Bill would repeal $25 tax on child-support income
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A newly imposed tax on child support income has taken many single parents by surprise, and a Montgomery County state representative is fighting to get the tax repealed.
Carla Backes, a single mother of three from Shamokin who’s fighting to get by financially, said she was shocked when she heard about the $25 annual tax that she has to pay because of the child support payments she receives.
“The money is supposed to be for the kids,” she said Thursday. “You don’t tax children, so why would they take the money?”
Though the $25 annual tax might not seem like much, to mothers already struggling it could mean the cost of school lunch for a month, state Rep. Kate Harper, R-61, said in a phone interview Wednesday. “Every dollar of money owed from one parent to another to help with the cost of raising a child should go to that child,” said Harper, who on Tuesday introduced her repeal legislation.
The tax is collected from those who receive court-ordered child-support payments that are processed electronically through the statewide collection and disbursement unit. It does not apply to privately arranged child-support payments between separated or divorced spouses because the government is not involved in those cases.
The tax is a result of the Federal Deficit Reduction Act, enacted in 2006, that requires states to pay the federal government through the state Department of Public Welfare (DPW). It allows states to choose whether to absorb the cost or pass it on to the custodial or non-custodial parent.
In Pennsylvania, Gov. Edward Rendell signed the bill in May, placing the burden of the tax on the child support recipient. Letters were sent from the DPW, which collects the fee, in July to alert those custodial parents who receive $2,000 or more a year — the equivalent of $167 per month — in child support with the help of the state’s disbursement unit. For a custodial parent who is slated to receive $2,000 or more a year while the non-custodial parent is not paying the court-ordered amount, the tax will be levied after the first $500 in support payments is received, said Stacey Witalec, spokesperson for DPW.
The tax is automatically deducted after the first $2,000 is received by the custodial parent.
Not all custodial parents must pay the fee. Parents who receive cash assistance from the welfare department and those who receive $500 to $1,999 a year in child support are exempt.
According to Witalec, the exemptions were made because the department wanted to avoid placing an extra strain on those who are receiving cash assistance. Instead, DPW will pick up the tab for those.
In Northumberland County, there are 1,164 cases in which the non-custodial parent is not paying child support. In the state of Pennsylvania, out of 500,000 cases, 220,000 owe back child support, Witalec said.
It is because of this high number of delinquent cases that the state chose to require the custodial parent to pay the tax, rather then assessing the non-custodial parent.
Northumberland Co. numbers
In Northumberland County, there are 3,164 active child support orders with parents who are not receiving cash public assistance, according to the Northumberland County office of Domestic Relations. Two thousand of those are actually receiving child support payments, so they will pay the tax if they are slated to receive $2,000 or more in support annually.
Cindy Price, director of Northumberland County Domestic Relations, said she thinks if the tax had to be imposed, it should be imposed across the board.
“Why is one better than the other?” she asked, referring to those who receive cash assistance and are not required to pay the tax, and those who don’t receive public assistance and are required to pay. She thinks those in both circumstances should pay.
Shocked by the tax imposition, she said many single mothers do not want to apply for public assistance and are working to make it on their own, but may be in a more dire financial situation than those receiving cash assistance, and now they have another $25 bill.
“These people struggle anyway, and they are not using the system,” she said.
According to Price, there are more than 300 single mothers in the county who are receiving cash assistance and will not be required to pay the tax, but many more receive food stamps and medical assistance.
Witalec said DPW encourages those who qualify to sign up for public assistance. “That is what the system is there for,” she said.
40 co-sponsors
Harper’s House Bill 2749, which has 40 co-sponsors, would rescind the taxes and the federal government would be paid through DPW. According to Harper, the federal government gives Pennsylvania $175 million a year for child support collection efforts and she believes the tax could be taken out of those funds. These funds are disbursed by DPW to each county Domestic Relations department.
“That is a cost which should be borne by Pennsylvania and not by the moms and children who are receiving child support,” Harper said.
“August is Child Support Awareness month — a time to emphasize the importance of ensuring all children have the financial and emotional support they need to live healthy and successful lives,” she said. “Taking $25 away from the support awarded to a child instead to pay got a government bureaucracy is not in keeping with that mission, nor it is the right thing to do.”
Harper believes child support should be used solely to benefit children. While she recognizes the difficulty in balancing the budget, she feels this was the wrong way to do it. In March, Harper proposed the state pay the fee for the families on a House bill, which passed with a 199-3 vote. However, a Senate bill requiring the families to pay was approved by the House in May on a 116-84 vote.
“Making money on women and children just doesn’t make sense,” Harper said in the phone interview.
Harper said the amount collected will be $3.2 million — a small amount compared to the state’s $27 billion budget.
Harper said she is working to get the tax repealed so the custodial parent will not have to pay the tax in 2009.
“That money could mean a new backpack, lunch money or a class picture,” she said.
Tough budget
Witalec said this budget year was “extremely difficult and was faced with million in budget cuts.”
“We worked to the 11th hour to ensure benefits and eligibility were not touched,” she said.
In order to find the $3.2 million owed to the federal government, the budget would have had to be entirely reexamined, she added.
“We were not willing to sacrifice benefits and eligibility for low-income and disabled Pennsylvanians,” Witalec said.
While state Rep. Robert E. Belfanti Jr., D-107, voted in favor of the tax, he said it was due to other valuable parts of the legislation involved.
“I am not particularly happy that the child supporter has to pay anything, but like everything else, where do we get the funds to replace these continuing federal government cuts?” he said Thursday afternoon.
Carla Backes, a single mother of three from Shamokin who’s fighting to get by financially, said she was shocked when she heard about the $25 annual tax that she has to pay because of the child support payments she receives.
“The money is supposed to be for the kids,” she said Thursday. “You don’t tax children, so why would they take the money?”
Though the $25 annual tax might not seem like much, to mothers already struggling it could mean the cost of school lunch for a month, state Rep. Kate Harper, R-61, said in a phone interview Wednesday. “Every dollar of money owed from one parent to another to help with the cost of raising a child should go to that child,” said Harper, who on Tuesday introduced her repeal legislation.
The tax is collected from those who receive court-ordered child-support payments that are processed electronically through the statewide collection and disbursement unit. It does not apply to privately arranged child-support payments between separated or divorced spouses because the government is not involved in those cases.
The tax is a result of the Federal Deficit Reduction Act, enacted in 2006, that requires states to pay the federal government through the state Department of Public Welfare (DPW). It allows states to choose whether to absorb the cost or pass it on to the custodial or non-custodial parent.
In Pennsylvania, Gov. Edward Rendell signed the bill in May, placing the burden of the tax on the child support recipient. Letters were sent from the DPW, which collects the fee, in July to alert those custodial parents who receive $2,000 or more a year — the equivalent of $167 per month — in child support with the help of the state’s disbursement unit. For a custodial parent who is slated to receive $2,000 or more a year while the non-custodial parent is not paying the court-ordered amount, the tax will be levied after the first $500 in support payments is received, said Stacey Witalec, spokesperson for DPW.
The tax is automatically deducted after the first $2,000 is received by the custodial parent.
Not all custodial parents must pay the fee. Parents who receive cash assistance from the welfare department and those who receive $500 to $1,999 a year in child support are exempt.
According to Witalec, the exemptions were made because the department wanted to avoid placing an extra strain on those who are receiving cash assistance. Instead, DPW will pick up the tab for those.
In Northumberland County, there are 1,164 cases in which the non-custodial parent is not paying child support. In the state of Pennsylvania, out of 500,000 cases, 220,000 owe back child support, Witalec said.
It is because of this high number of delinquent cases that the state chose to require the custodial parent to pay the tax, rather then assessing the non-custodial parent.
Northumberland Co. numbers
In Northumberland County, there are 3,164 active child support orders with parents who are not receiving cash public assistance, according to the Northumberland County office of Domestic Relations. Two thousand of those are actually receiving child support payments, so they will pay the tax if they are slated to receive $2,000 or more in support annually.
Cindy Price, director of Northumberland County Domestic Relations, said she thinks if the tax had to be imposed, it should be imposed across the board.
“Why is one better than the other?” she asked, referring to those who receive cash assistance and are not required to pay the tax, and those who don’t receive public assistance and are required to pay. She thinks those in both circumstances should pay.
Shocked by the tax imposition, she said many single mothers do not want to apply for public assistance and are working to make it on their own, but may be in a more dire financial situation than those receiving cash assistance, and now they have another $25 bill.
“These people struggle anyway, and they are not using the system,” she said.
According to Price, there are more than 300 single mothers in the county who are receiving cash assistance and will not be required to pay the tax, but many more receive food stamps and medical assistance.
Witalec said DPW encourages those who qualify to sign up for public assistance. “That is what the system is there for,” she said.
40 co-sponsors
Harper’s House Bill 2749, which has 40 co-sponsors, would rescind the taxes and the federal government would be paid through DPW. According to Harper, the federal government gives Pennsylvania $175 million a year for child support collection efforts and she believes the tax could be taken out of those funds. These funds are disbursed by DPW to each county Domestic Relations department.
“That is a cost which should be borne by Pennsylvania and not by the moms and children who are receiving child support,” Harper said.
“August is Child Support Awareness month — a time to emphasize the importance of ensuring all children have the financial and emotional support they need to live healthy and successful lives,” she said. “Taking $25 away from the support awarded to a child instead to pay got a government bureaucracy is not in keeping with that mission, nor it is the right thing to do.”
Harper believes child support should be used solely to benefit children. While she recognizes the difficulty in balancing the budget, she feels this was the wrong way to do it. In March, Harper proposed the state pay the fee for the families on a House bill, which passed with a 199-3 vote. However, a Senate bill requiring the families to pay was approved by the House in May on a 116-84 vote.
“Making money on women and children just doesn’t make sense,” Harper said in the phone interview.
Harper said the amount collected will be $3.2 million — a small amount compared to the state’s $27 billion budget.
Harper said she is working to get the tax repealed so the custodial parent will not have to pay the tax in 2009.
“That money could mean a new backpack, lunch money or a class picture,” she said.
Tough budget
Witalec said this budget year was “extremely difficult and was faced with million in budget cuts.”
“We worked to the 11th hour to ensure benefits and eligibility were not touched,” she said.
In order to find the $3.2 million owed to the federal government, the budget would have had to be entirely reexamined, she added.
“We were not willing to sacrifice benefits and eligibility for low-income and disabled Pennsylvanians,” Witalec said.
While state Rep. Robert E. Belfanti Jr., D-107, voted in favor of the tax, he said it was due to other valuable parts of the legislation involved.
“I am not particularly happy that the child supporter has to pay anything, but like everything else, where do we get the funds to replace these continuing federal government cuts?” he said Thursday afternoon.
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