Gov. Brian Kemp’s proposal to increase foster care adoption tax credits could result in a state revenue loss of $12.8 million over the next five years, according to fiscal researchers.
Kemp wants the General Assembly to increase the annual tax incentive from $2,000 to $6,000 to promote more adoptions from the state’s foster care system. Rep. Bert Reeves, R-Marietta, has considered drafting a proposal of the bill, according to a fiscal note from the Department of Audits and Accounts.
Georgia State University’s Fiscal Center projected that the proposal could decrease state tax revenues by $1.4 million in 2020 and grow up to $3.6 million by 2025.
The proposal increases the tax credit to $6,000 for only the first five years after the child’s adoption. Parents would continue to receive $2,000 until the child turns 18 years old. The credit cannot be more than what the taxpayer owes during the tax year, but parents have the option to carry over the credit to another tax year even after the child ages out.
Researchers said the current foster care adoption credit already surpasses most of the tax liabilities for parents who have applied for it. Therefore, it has accumulated into millions of dollars in carryover credits.
According to the U.S. Department of Health & Human Services, 1,401 children were adopted from Georgia’s foster care system in 2017. However, fiscal researchers said a large portion of adoptive parents did not apply the credit to their taxes.
Based on projections, 5,021 adoptive children in 2020 qualify for the tax credit under the current law. Fewer than half of the adoptees would fall under the five-year threshold for the $6,000 credit. Yet, potential credit baselines for 2020 under the current law could reach $7 million. The proposal is projected to make available $8.5 million in 2020.
Leftover credits will even be higher.
The 2020 balances under current law could be around $17.6 million, but the proposal could cause an accumulation of $25.6 million. The number could reach $66.9 million by 2024.
Notwithstanding, the estimated $1.4 million decrease in tax revenue resulting a from a possible change in law is a pinch of the state’s revenue collection.
Year-to-date, net tax collections have totaled $14.2 billion, according to Department of Revenue numbers released Monday.
Kemp pushed the incentive for foster care as an alternative to abortion after signing an anti-abortion bill in May 2019.
Georgia had about 12,837 children in foster care at the beginning of February 2020, according to the Division of Family & Children Services.
“It’s incredibly sad how many children are abandoned in our hospitals,” Kemp said during his state of the state address in January.
Buzz Brockway, vice president of public policy for the independent, nonpartisan think tank Georgia Center for Opportunity, said that “a stable, healthy family is a crucial part” of success.
“At the very top of our policy agenda should be protecting the kids in the foster care system, and right alongside that is supporting these foster parents who are called to a mission unlike any other,” he said.