Thursday, September 20, 2012

Adoptive Parents: We Are the 47%

There's been a lot of talk this election season about people depending on the government for handouts, culminating in the recent comments by Mitt Romney about the 47% of people in America who don't pay federal income taxes, that they are "dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. That that's an entitlement. And the government should give it to them. . . . . And so my job is not to worry about those people—I'll never convince them that they should take personal responsibility and care for their lives."

There's also been a lot of attention paid to some groups in that 47% -- like seniors, active-duty military, the working poor (those earning less than $20,000), thousands of millionaires, etc.  I was curious, though -- how many in that 47% are adoptive parents who have utilized the adoption tax credit and thus pay no taxes. I couldn't find any figures for how many adoptive parents take advantage of the adoption tax credit each year, much less how many use it to meet their entire tax obligation. . . .

So I took a look at the tax tables for 2011, looking to see at what income level a person's taxes would have been completely paid by the $13,360 adoption tax credit.  I was actually a little surprised by how high that income was -- a single person taking nothing but the personal exemption of $3650 and the standard deduction of $5800 could earn up to $78,400 and not pay a penny of federal taxes because the adoption tax credit covered their tax obligation.  A married couple taking nothing but the personal exemptions of $7300 and standard deduction of $11,600 could earn up to a whopping $103,350 and not pay a penny of federal taxes because the adoption tax credit covered their tax obligation. AND the adoption tax credit is refundable -- meaning that if your tax obligation is less than $13,360, you get the balance as a refund! Government handout, anyone?!

Of course, the adoption tax credit is a one-time thing and doesn't seem to suggest some long-term dependency, right?  But then, we don't know whether that's true for the rest of the 47% as well.  All we know is that in any given year a certain percentage of people don't pay any federal income taxes, not how long they haven't paid any income taxes. And don't get me started on adoption subsidies that do last year after year. . . .

So, if you're disturbed by the specter of 47% of Americans not paying federal income taxes, then it's time to get rid of the adoption tax credit, right?!  In fact, those of us who took the credit in the past should be ashamed of ourselves for taking that government handout, for our dependency on the government, for sucking at the government teat.  Right?!

Hmm, I'm not sure many adoptive parents would agree to that.

So when you look at the 47%, remember that one person's "dependency" is another person's deeply-prized tax break. . . .

8 comments:

Almond Tea said...

I couldn't agree more! Well-said.

Myst said...

GREAT post! I had no idea the USA had that kind of scheme going. Just makes me feel even sicker about the adoption system over there. Unbelievable! Again, great post and thanks for that information.

Terri & Gary said...

Ok, I AM an adoptive parent in the US and I DO take it. 1st, it's a CREDIT, not refundable! There were refunds given for TWO years, 2010 and 2011 -- as part of a tax break.

ALSO, the kids that this is directed to are already on the government roll in foster care. AND the government has MANY people paying and repaying just to get through the adoption.

This is NOT paying for the entire adoption either. When people adopt through other avenues, the adoptions can cost from 30-50,000 or more. The CREDIT is around 12,000. And if you don't pay enough into taxes (we pay them as we get paid, so we DO pay taxes), then you don't get it back. That's why it is able to be carried over for up to 5 years.
This is NOT like the "typical" government handout in that we are not living on this amount. USUALLY (but not always of course) it goes toward paying off the debt that was incurred by the adoption.
This is not a SCHEME. It is created to encourage more people to adopt. With the cost of adoption so high, many are not even aware or willing to try to bring another into the home.
This said, I don't agree with it being done away with........BUT, if the government were to limit it to those in foster care, I would understand why they would do that since those children are already being paid for by the government.

Lori @ Five of My Own said...

absolutely perfect post! Sharing this with everyone I know!

theadoptedones said...

Malinda - I figured that out and wondered how long before the adoption community realized it. I would assume he took the 2011 stats and I *think* it was over 700 Million estimated to be paid out in the ATC. I will have to double check and will come back if not close.

theadoptedones said...

Found the details:

"The federal adoption tax credit,
established in 1996, was amended in
2010. These amendments included
making the credit refundable (meaning taxpayers could receive payments in excess of their tax liability) and increasing the maximum allowable credit to $13,170 of qualified adoption expenses for tax year 2010. As of August 20, 2011, taxpayers filed just under 100,000 returns, claiming about $1.2 billion in adoption credits."

http://www.gao.gov/new.items/d1298.pdf

I do not know if that it a sum of all years or just 2011...

Angelle said...

Terri & Gary:

You said:

"ALSO, the kids that this is directed to are already on the government roll in foster care."

But then you said:

"This is NOT paying for the entire adoption either. When people adopt through other avenues, the adoptions can cost from 30-50,000 or more. The CREDIT is around 12,000."

Are you saying that only adoptions from foster care qualify for the deduction and those adoptions can cost $30-50,000?

Carrie said...

Just FYI, the credit was only refundable for a couple of years. Unless something changes in the next few months, it is no longer refundable for adoptions finalized in 2012 and beyond.