The child support Laffer curve

A fascinating story from Ontario, Canada where an ex-wife finds out the hard way that there's a downwards slope to the demand/income child maintenance curve:

The 53-year-old education software expert said a court ruling which made him pay $4,000 a month to his ex-wife in child support would financially ruin him.
And so, with extensive work contacts in South East Asia, he sent his former love Donna Mills an email saying he had left the country for good.
Mr Mills left the country before the trial could take place. He now lives in Dasmarinas City, 30 miles south of Manila, with his new wife, former caregiver Rosemarie Espiritu.
So far so good: a deadbeat dad having run off with a foreign hussy, classic Daily Mail fodder. But wait, what's this?
The trouble began when the couple split in 2005. After a two-day trial, they agreed Mrs Mills would have sole custody of the children and stay in the $1.2million Lake Ontario house.
He would pay child support, and she would pay $175,000 to buy him out of the house, which had a $600,000 mortgage on it. She would also receive $2,000 a month in rent from a separate flat.
But Donna later said she was 'rushed and pressured and did not read' before signing, and that she did not understand she would never receive any future spousal support.
Ok, let's calibrate here. You can buy a very nice house in a good area of Toronto for $300k-$400k. She makes a $1mm capital gain (the property) and receives recurring income of $2000/month. But five years later she decides it's not enough and goes back to court.

You can just imagine the discussion between Mrs. Mills and her lawyer. "Courts hate separated fathers - you should be able to get a few thousand per month extra with no problems. What's to lose?" I do like her claim that she was "rushed and pressured" in a 2-day trial. Presumably she had legal representation there - is she suing her then lawyer, or is he/she the brain behind last year's attempted renegotiation?

What Mrs. Mills has discovered is that there's a Laffer curve to child support. If you demand too much, you give your ex-spouse every reason in the world to run off to an obscure corner of the world and thumb his nose at you. Sure, he's going to have a hard life there away from his family and friends - and yet, at some point, it becomes a financially rational choice.

And what of the ex-wife now?

Former teacher Mrs Mills, a Danish immigrant with both a Canadian and European passport, in the meantime said she cannot work because of her 'onerous' family responsibilities.
That's a ten year old whose cancer is now in remission, a 14 year old Downs Syndrome sufferer, a 17 year old "who is fighting depression" and a 19-year-old drug addict. It's clearly been a hard couple of decades for the family - and yet, Mrs. Mills thought she'd be better off without her husband. Good call.

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