Back in 1984, Congress passed the Child Support Enforcement Amendment which encouraged states to develop numerical guidelines for setting child support awards. Nevada’s response to this federal law was to enact NRS 125B.070 in 1987 which sets a parent’s “obligation for support” of one child at 18% of his or her “gross monthly income.” In order to prevent excessive support orders, however, the legislature set a presumptive maximum and, in colloquial terms, “capped” a parent’s child support obligation for one child at $500 per month.
As time passed, NRS 125B.070 came under attack as being arbitrary. While proponents of the legislation insisted that the cap prevented child support from becoming “hidden alimony,” critics fairly argued that NRS 125B.070 did not live up to the public policy that, after a family separation, parents should spend on their children the approximate percentage of income that they would have had the family stayed together. This is especially true, the critics argued, because inflation was eroding the value of the $500 presumptive maximum. Critics also argued that NRS 125B.070 violated equal protection in that higher wage earners never saw an increase in their child support obligation while lower wage earners saw an increase every time they received a raise.
In 2001, the legislature responded to these criticisms by amending NRS 125B.070 to peg the cap to the Consumer Price Index. The legislature also established a sliding scale for the presumptive maximum. Beginning with those earning $50,000 per year, the legislature increased the cap by $50 for every $25,000 of additional annual income. Those earning $175,000 or more, topped out at a monthly obligation of $800 per month. In other words, the legislative formula required a parent earning $50,000 per year to pay $500 per month or 12% of his or her gross monthly income for the support of one child. By comparison a parent earning $180,000 per year was required to pay $800 per month or 5.3% of his or her gross monthly income. A parent earning $1,000,000 per year was required to pay the same $800 per month or 0.1% of his or her gross income.
Granted, the statute does provide a family court with the discretion to deviate from the formula based upon a discrepancy in the parent’s respective incomes. However, in practice, the deviations are typically not large and tend to come in the form of the payment of private school tuition or other expenses related to the child rather than an increased support payment directly to the other parent. As such, child support awards in cases involving high income earners are always lower in Nevada than they would be in one of Nevada’s sister states. For a discussion about how Nevada might even seem like a safe haven for high income earners see http://nevadaappellateattorneys.com/2012/05/14/nevada-not-a-haven-for-extraordinarily-high-income-earners/
With the inexorable march of inflation, lower income parents are seeing an ever increasing percentage of their income become subject to child support. If you are the on the receiving end of a child support obligation, this is a good thing for you and your children. On the other hand, if you are on the paying end of a child support obligation you might feel that Nevada’s unique child support structure treats you unfairly when compared to the wealthier residents of the state.
Indeed, since the cap for the lowest income bracket increases, on average, $12.00 per year, those parents making $50,000 per year will likely receive no “benefit” from the cap within the next 6 years. In other words, the lowest income earners will eventually pay the full 18% of their gross monthly income in child support, while their counterparts earning $180,000 or more will continue to pay a relatively small percentage of their annual income in the form of child support.
This apparent inequity in Nevada’s child support formula then begs the question: Is Nevada a haven for the wealthy child support obligor? The passage of time suggests that it really is.