BILL NUMBER:S2026

TITLE OF BILL:  An act to amend the tax law, in relation to providing
for a deduction from personal gross income for expenses incurred in
the adoption of a child in the foster care system

PURPOSE OR GENERAL IDEA OF THE BILL:

In order to decrease the length of wait time for adoption of children
in the foster care system and to create incentives to decrease the
number of children in foster care waiting to be adopted, this
legislation creates a tax deduction for all expenses incurred by the
family adopting children from the foster care system.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1: Subsection (c) of section 612 of the tax law is amended by
adding a new paragraph (42) which lists income tax deductibles for
eligible families adopting a child in the foster care system.

Section 2: Provides for immediate effective date and shall apply to
all taxable years beginning on or after the first of January in the
year in which it shall have become law.

JUSTIFICATION:

              

Currently, New York State has over 23,000 children in custody in its
foster care system. For a large number of these children, returning to
their natural parents is impossible. In 2011, there were over 6,400
foster care children waiting to be adopted and the median years each
has to wait to be adopted is close to 4.5 years. At an annual cost to
New York State of over $33,000 per child in state custody, it is
obvious that New York State government must do more to create
incentives for families interested in adopting a child in the foster
care system. This legislation gives adoptive families an income tax
deduction for all the expenses incurred in such an adoption. In
addition, it is a well understood dynamic that the longer a child is
in the foster care system, the slimmer the chances for adoption. As
children age in state custody it becomes a negative for them because
families tend to adopt younger children. Therefore New York must do
more to place these children in healthy, loving and nurturing home
environments. At a total annual cost of over $759 million dollars to
maintain the 23,000 in state custody, it is clearly in the best
interest of these children and to New York taxpayers to create
incentives to reduce the number of children in government custody.

PRIOR LEGISLATIVE HISTORY:

New Legislation.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT:

Currently, New York spends over $33,000 annually for each child in the
foster care system. In 2011, there were over 6,400 foster care
children waiting to be adopted, but only about 7% or about 417
children were actually adopted. Allowing families to deduct the
estimated $2,000 to $10,000 in expenses incurred to adopt a child


reduces the amount paid in taxes to NYS by less than $600 per each
adoption. Obviously, it makes enormous economic sense to lose $600 per
adoption in tax collection by creating incentives to remove children
from state custody at the current yearly cost of over $33,000 per
child.

Based on 2009 total adoptions from the foster care system, which
placed 2,100 children with adoptive families, New York State tax
collection would be reduced by about one million dollars. However,
with over 23,000 children in State custody, during any given year, at
the stated annual cost per child of over $33,000, the state will
actually achieve savings in excess of the Projected decrease in tax
revenue for each child adopted due to the incentives provided in this
legislation.

EFFECTIVE DATE:

This bill will take effect immediately.