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11/6/2017 7:45:00 PM
Pence tax reform push endangers his gubernatorial legacy on adoption

Dan Carden, Times of Northwest Indiana

INDIANAPOLIS — A key component of former Gov. Mike Pence's effort to make Indiana "the most pro-adoption state in America" soon could be eliminated under federal tax code changes championed by now Vice President Mike Pence.

In 2014, the Republican-controlled General Assembly responded to the Republican governor's call to promote adoption by enacting a state income tax credit to ease the financial burden of the adoption process for Hoosier families.

Under House Enrolled Act 1222, the Indiana adoption credit is available to taxpayers eligible to receive the federal adoption tax credit.

It's worth either 10 percent of the federal credit claimed by an Indiana taxpayer, which last year had a maximum value of $13,460 per child, or $1,000, whichever is less.

According to the Indiana Department of Revenue, a total of $653,495 in adoption tax credits were awarded to 1,332 taxpayers in 2016. That's up from $511,263 in adoption credits provided to 1,040 Hoosiers in 2015.

However, the Republican tax legislation pending in the U.S. House would repeal the federal adoption tax credit, as part of an overall strategy to delete special tax benefits in favor of a larger standard deduction and lower tax rates.

Pence last week in Pennsylvania said those changes would "put more money in the pockets of working families" by exempting the first $24,000 in earnings from federal income tax, and increasing the child tax credit to $1,600 per child from $1,000.

But they also would make Indiana's adoption tax credit worthless, since eligibility for the state credit hinges on an individual qualifying for the potentially soon-to-be nonexistent federal credit.

On Sunday, Pence said he and President Donald Trump expect there will be changes to the federal tax legislation as it works its way through the House and into the Republican-controlled U.S. Senate.

"But we think the House bill is a great start," Pence said.

State Sen. Brandt Hershman, R-Buck Creek, chairman of the Senate Committee on Tax and Fiscal Policy, said Monday if the federal adoption tax credit is eliminated, he's open to decoupling Indiana's adoption tax credit from the federal credit and continuing to offer it.

"We make policy evaluations to determine if we agree with federal tax policy fairly often," Hershman said. "This one strikes me as one that sends a good public policy message."

According to the Indiana Department of Child Services, adoptions in Indiana declined during Pence's four-year term as governor to an average of 1,259 per year, compared to an annual average of 1,538 adoptions between 2009 and 2012.

Related Links:
• Indiana Dept. of Revenue Information Bulletin on Adoption Tax Credit

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• Cash cow: Federal subsidies keep small farms going
• Suggested savings from proposed federal tax cuts come with caveats

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