[Congressional Record Volume 146, Number 138 (Saturday, October 28, 2000)]
[Senate]
[Pages S11302-S11303]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          ADOPTION TAX CREDIT

  Mr. GRASSLEY. Mr. President, I come to the floor today to discuss a 
critical issue: adoption of children with special needs. I appreciate 
the work of my Senate colleagues who cochair the Congressional 
Coalition on Adoption, Senators Craig and Landrieu. I thank them for 
their dedication in furthering adoption. Both have demonstrated their 
commitment to adoption through word and deed. I respect their efforts 
and look forward to working with them in the coming years to increase 
adoptions and to improve the lives of vulnerable children.
  The adoption tax credit which passed in 1996 was a step in the right 
direction. It provided a 5-year credit for adoptions of nonspecial 
needs children. It provided a permanent credit for adoptions of 
children with special needs. I commend Senator Craig for his efforts to 
extend the provision relating to nonspecial needs adoptions. As Senator 
Craig mentioned on the floor earlier today, while extending the credit 
is another step in the right direction, we must not rest on our 
laurels. There is more to be done especially as it relates to adoption 
of special needs children. The cost of adoption varies widely. Private 
or international adoptions can cost as much as $30,000 per child. In 
contrast, adoptions from foster care are often subsidized by the 
government.
  Parents who choose to adopt a child from foster care or through a 
public

[[Page S11303]]

agency incur little, if any, expenses related directly to the adoption 
process. However, they incur a great deal of ``incidental'' expense 
related to adoption. The adoption tax credit is available only for 
``adoption related expenses'' which include necessary adoption fees, 
court costs, and attorneys' fees. This limitation works directly to the 
disadvantage of families adopting children with special needs, because 
the credit does not recognize the overwhelming indirect expenses 
associated with adopting such a child. These expenses might include 
fitting the home with a ramp for a wheelchair bound child, to cite one 
example.
  When Congress passed the tax credit in 1996, it also directed the 
U.S. Department of the Treasury to issue a report on the effect of the 
credit. According to the Treasury report released this month, for tax 
year 1998, 77,000 adoptions were eligible for a tax credit--31,000 for 
special needs and 46,000 for non-special needs adoptions. However, of 
the 31,000 eligible special needs adoptions, only 4,700 received 
benefits from the tax credit. Compare that with 45,700 of the eligible 
46,000 adoptions of non-special needs children that received benefits 
from the tax credit.
  Let me put it another way. The Treasury Department reports 15 percent 
of eligible special needs adoptions received tax benefits compared with 
99 percent of eligible non-special needs adoptions which received tax 
benefits for 1998. For those wondering why so few special needs 
adoptions benefited from the tax credit in 1998, here is one reason. 
Average expenses--allowed by current law--were reported for tax year 
1998 as $3,540 per special needs adoption and $5,890 per nonspecial 
needs adoption. When you look at these expenses, it is clear that 
increasing the amount of the tax credit for special needs adoptions 
will have little to no impact on families seeking to adopt special 
needs children.
  I view this as one of the flaws in current law that must be fixed. 
Let me be clear: I support the extension of the tax credit for non-
special needs adoption. I also support taking a hard look at how the 
current tax credit impacts special needs adoptions. I urge my 
colleagues to consider the impact of the tax credit on families 
adapting special needs children. Again, I commend Senators Craig and 
Landrieu for their efforts on behalf of vulnerable children.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I would like to associate myself with 
the remarks of my friends from Iowa and Louisiana on this matter. The 
Finance Committee is very much concerned with and for this legislation. 
It will become law.

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