The adoption tax credit is a way to promote adoption and make it feasible for lower income families, but some people have it confused with welfare.

CNN Money ran an article a couple of weeks ago on the Adoption Tax Credit and the delays many families are experiencing receiving credit.  Now, you might imagine that the readers of CNN Money would be the thoughtful, staid type. Heck, CNN Money is even backed by Fortune and Money magazine—the very bastions of thoughtful staidness. Right?  Based on some of the responses concerning the adoption tax credit, I’m not so sure.  Many readers equated this refundable credit to welfare.

What is the Adoption Tax Credit?

I won’t bore you with too many details on the adoption tax credit since I’ve posted on this credit ad nauseam (here and here), and we have extensive resources at  Creating a Family on the this credit, but let me give you just a bit of history to put these comments in context.  The adoption tax credit allows adoptive parents to claim as much as $13,170 per child to cover some of the cost of adoption.  In the past this has been a “standard” tax credit which lowered the amount of taxes the adoptive parent owed.  In 2010 for the first time, this tax credit became refundable, meaning the government cuts a check to the adoptive parents in the amount of the credit rather than applying the credit to reduce the amount of taxes owed.  This is especially helpful for lower income families because they get the money even if they don’t owe any taxes.  Families adopting a child with special needs (which would include most adoptions from foster care) are eligible for the entire credit, even if cost them nothing to adopt.

What do people think?

Herewith are some of the comments by the erudite and sophisticated readers of CNN Money:

  • MikeDUtah: This is not a “refund” but a redistribution; taking from some to give to others. It is no different than a welfare check.
  • MrJD: Many people pay nothing in and get money out. The tax code has become a means of paying stealth welfare.
  • tuntin,.Stupid using kids to make money….
  • And, what I consider the pièce de ré·sis·tance of ignorant comments Arbutus: What a crock!!! Get paid to adopt kids, then get on the government dole so you can sit around and have them wait on you like little slaves. Get a free house and a lifelong slob job. It’s an even better deal if you score special needs kids and get paid by the government to take them home and ignore them. It’s one thing to get a tax credit on earned income, it’s another thing completely to get welfare from the IRS.

Tax benefits are a way for the government to redistribute income.

Oh my, where to begin.  Lawmakers, for better or for worse, have long used taxes to attempt to regulate human behavior. Take for example, home ownership. The powers that be way back in the 1950s decided that home ownership was good for people and good for our country.  Over the years, they’ve tried all sorts of tax benefits to encourage people to buy a home.  Home mortgage interest is deductible on your income taxes if you itemize. You can deduct the interest on home mortgage debt, even if it is for a vacation home. You can also deduct the interest on home equity debt, even if you don’t use the money for home improvements. Real estate taxes are deductible as well.  In 2008, in the midst of the Great Recession, Congress added a first-time homebuyer tax credit.

All tax benefits could be considered as a way to redistribute income. Granted, in the world of tax benefits, refundable tax credits are about as good as you get, but adoption is hardly the only refundable credit.  Consider the following:

  • earned income credit (to help low income working people)
  • child tax credit
  • American opportunity credit (for college expenses)
  • making work pay credit
  • health coverage credit

The adoption tax credit is not limited to adoptions from foster care, but many of the very large adoption tax credit refunds that are being highlighted by the media, including in the CNN Money article that the commenters were responding to, are for families that have adopted a number of children from foster care.  A family that adopts four children from foster care might be eligible for a credit of $52,800.

The Adoption Tax Credit is good for families and the government.

Looking at the tax credit strictly from a monetary standpoint, it offers a major cost savings to the government.  Each state is different, and the dollar amounts are hard to find, but the annual cost to support a child in foster care is about $25,000. Note that this in an annual cost.  If the child had not been adopted and continued to be supported by the government, the cost is much more. The one-time payment of $13,170 is a bargain!

Of all the many worthwhile socially valuable things our government could choose to encourage, I can’t think of a single thing more valuable than adoption.  Every shred of research supports the idea that children need permanent caring families in order to grow into healthy productive members of our society….to say nothing of growing into mentally healthy, reasonably happy adults.  Adoption is in our country’s best interest, in the family’s best interest, but especially in the child’s best interest.

As to the comment by the mental giant Arbutus, I don’t know what planet he’s/she’s living on, but if he’s found the secret to getting kids to wait on you like a slave, I wish he’d share it with me.  You wouldn’t believe the eye rolling and complaining that goes on in my house when a child is asked to clean the bathtub or wipe down the kitchen counters.

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