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Who responds to changes to the federal adoption tax credit? Evidence from Florida
Author(s) -
Rodgers Luke P.,
Wallace Cullen T.
Publication year - 2020
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/soej.12466
Subject(s) - tax credit , offset (computer science) , liability , economics , public economics , business , demographic economics , labour economics , monetary economics , finance , computer science , programming language
The federal adoption tax credit (ATC) can help offset the cost of adoption, yet it is unclear whether it has a positive impact on the number of adoptions or if it merely transfers resources to households who would have adopted anyway. The ATC has primarily been a nonrefundable tax credit, but in 2010 and 2011 the full amount (over $13,000) was available as a refundable tax credit, representing a substantial increase in the benefit to lower‐ and middle‐income families—those with typically low tax liability. Using county‐level data from Florida, we estimate an increase of 265 additional public adoptions over what would be expected at the end of 2011. Relative decreases in adoptions in the first months of 2012 suggest that much of this increase is due to retiming rather than new adoptions. The response appears to be concentrated in lower‐ and middle‐income households living in higher‐income, more populated areas.