Child Support Tax Act

Child Support Tax Act - Amends the Internal Revenue Code to impose a child support tax on liable absent parents of minor children. Sets the rate of such tax for a parent of one child at 20 percent of the lesser of: (1) such parent's adjusted gross income; or (2) the amount of the contribution and benefit base as determined by title II (Old Age, Survivors and Disability Insurance). Sets the rate of such tax at 30 percent of the lesser of such amounts for the parent of two children and at 40 percent for the parent of three or more children. Requires that such tax be withheld in the same manner as the Federal income tax. Allows up to one percent of such withholding to be applied to the employer's administrative expenses.

Amends part D (Child Support and Establishment of Paternity) of title IV of the Social Security Act to provide Federal child support benefits to eligible children of liable absent parents. Sets forth the rate of such benefits for calendar year 1987. Provides for annual increases in such benefits beginning in calendar year 1988. Bases such increase on the percentage increase (if any) in the average of the total wages reported for the preceding calendar year. Limits the maximum benefit paid to any eligible children to the amount of the tax collected from the liable absent parent.

Defines "eligible child" as an individual: (1) who is under the age of 18; (2) who is living in the home of a relative or was removed from such home pursuant to a voluntary placement agreement or a judicial determination; (3) one or both of whose parents is a liable absent parent; and (4) on whose behalf child support benefits have been applied for.

Defines "liable absent parent" as an individual: (1) who is absent from the home on other than a temporary basis; (2) who has a legal obligation under State law to furnish child support; and (3) whose whereabouts have been established by the State, the Internal Revenue Service, or the Federal Parent Locator Service. Sets forth administrative procedures for the determination of eligiblity for benefits. Provides for judicial review of such a final determination.

Makes such child support tax and benefit program effective beginning in 1987.

Requires the Secretary of Health and Human Services to undertake a demonstration program of such child support tax and benefit program in at least six States prior to the effective date of the Federal program. Requires those States participating in the program to establish: (1) a State child support tax; and (2) a State child support payment program substantially equivalent to the Federal tax and benefit program established by this Act. Requires the Secretary to provide technical assistance and to pay the reasonable administrative expenses of the States participating in such demonstration program.

Requires the Secretary to submit an annual report to the Congress on such demonstration program. Requires the Office of Management and Budget to submit a report to the Congress on the budgetary impact of implementing the Federal child support program established by this Act.