If Charity Begins at Home, Why Do We Go Searching Abroad? Why the Federal Adoption Tax Credit Should Not Be Used to Subsidize International Adoptions

Abstract:     
Currently, nearly half a million children reside in United States foster care, some 'aging out' without ever having been adopted. Beginning in the 1980s and carrying through the 1990s, Congress passed a series of legislative measures aimed at helping those children 'in the system.' As incentive for placing children in permanent homes, and as part of the Adoption Promotion and Stability Act of 1996, Congress created a tax credit for those who adopted children. Since that time, the federal adoption tax credit has risen to as high as $13,360 per child, some years as refundable and other years as non-refundable. However without Congressional action, portions of that credit were scheduled to sunset at the end of 2012. On January, 1, 2013, as part of a larger measure to avoid the looming 'fiscal cliff,' Congress passed, and President Obama signed into law the next day, the American Taxpayer Relief Act of 2012. This legislation included a permanent, although non-refundable, extension of the adoption tax credit.

In recent years, international adoption has become a new social trend, fueled by celebrity and evangelical circles alike (although arguably for different reasons), even though a large number of children remain in the foster care system. Children from other countries are being imported to form the new American families, and with the new legislation, those who adopt internationally are now receiving essentially the same tax benefits as those who adopt from foster care. Indeed, the non-refundable status of the recent legislation actually provides more of a benefit to those who adopt internationally, as the ones who adopt from foster care have traditionally been lower- to middle-class Americans with less of a tax liability. However, this is counter to the original purpose of the of the tax credit, which was to help reclaim U.S. children from foster care and provide a monetary incentive for their adoption.

This article begins in Part II by exploring the plight of those in foster care and the legislative attempts to move them to permanent, adoptive homes. Part III turns to a historical overview of adoption and the changing international trend in the adoption market, focusing on the unlikely pairing of celebrity and evangelical circles as those currently driving the demand for foreign-born children. It also explains why opposition to international adoption exists and how critics have worked to curtail the practice. A look at the federal adoption tax credit in Part IV and social distributive justice theories in Part V leads to the conclusion that the federal adoption tax credit should not be used to subsidize international adoptions while the very ones who were the original intended beneficiaries of the legislation — those 'lost in the system' — remain there, and are not being helped as the statute originally intended.

Number of Pages in PDF File: 52

Keywords: adoption, foster care, tax credit, Obamacare, Affordable Care Act, international, Christian, evangelical, celebrity, taxpayer, refundable, nonrefundable, Clinton

JEL Classification: H53, K33, I38, H60, H20, K19

Accepted Paper Series