GOP Tax Plan: Adoption Back In, Foster Youth Jobs Bill Still At Risk

As reported here last week, the Adoption Tax Credit was slated for repeal last week when the Republican tax plan was unveiled. After a flurry of lobbying from pro-adoption and pro-life groups, ATC is off the chopping block.

From Rep. Trent Franks (R-Ariz.), co-chairman of the Congressional Coalition on Adoption and co-chairman of the House Pro-Life Caucus:

The Republican Party has been and always will be the party of life. Adoption, not abortion, has long since been one of the most noble mantras of the party of Lincoln. Chairman Kevin Brady and Chairwoman Cathy McMorris Rogers, as well as Rep. Diane Black and Rep. Mike Kelly, should be effusively praised for ensuring the Adoption Tax Credit remains in the House Republican Tax Reform bill.

As presently constituted, ATC mostly helps middle- and upper-class adoptive parents seeking private domestic or international adoptions. In 2014, there were $355.1 million in ATC credits claimed on a total of 73,951 returns. Of that, 62 percent ($220.6 million) went to households making $100,000 or more. Only $19 million in credits went to households with income between $0 and $50,000.

This was not always the case. In 2009, the Affordable Care Act made ATC refundable for two years. So in 2010 and 2011, parents received a tax refund if their tax burden was below the maximum credit. When the credit was extended in 2013, Congress reverted it back to nonrefundable status.

During those two years, the average tax credit jumped from $4,000 to $11,000. Afterward, it went right back to $4,000.

The Senate version of the tax plan, unveiled yesterday, also retains the Adoption Tax Credit.

Still in danger, however, is a proposed bill that would incentivize employers to hire young workers who were in, or had aged out of, foster care.

The Improved Employment Outcomes for Foster Youth Act, H.R. 2060 and S. 885, would provide tax credits of up to $2,400 to employers who hire current and former foster youth between the ages of 18 and 27. This is achieved by making youth who were in foster care at age 16 an eligible category under the federal Work Opportunity Tax Credit (WOTC), which incentivizes the hiring of certain groups that struggle with barriers to employment.

The bill was born from an employment training partnership between iFoster, a California nonprofit, and several large employers. iFoster has prepared current and former foster youth for entry-level jobs and placed hundreds of them with partners, including several major grocery store chains, Starbucks and CVS.

Proponents of the bill were told it would likely be taken up as part of the overall tax reform. But obviously, that can’t happen if the underlying framework, the WOTC, is eliminated in the process. WOTC is currently repealed in the House plan, and alive in the Senate version.

Youth Services Insider‘s guess is that at the end of the day, WOTC will survive the process. The credit was established in 1996 as a way to incentivize the hiring of military veterans, which is still the focus of the credit today. Voting to end a tax credit for veterans would surely be the subject of many a political ad next summer.

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