— MONTGOMERY, Ala. (AP) — Alabama Republicans are off to a fast start on their package of proposed changes to the state tax code.
The House panel that writes tax policy approved a $1,000 tax credit for certain adoptions and a plan to make it for some small businesses to bypass estimated sales tax payments, instead allowing them to wait and make payments based on actual revenues.
Democrats on the Ways and Means Committee raised concerns that the measures will cause a drop in state revenues, though the business tax change would be just a one-time hit to the state's tax flow. Republicans countered that the changes will help taxpayers who provide a benefit to the state.
Rep. Paul Lee, R-Dothan, said his adoption tax credit would help with the considerable costs of adopting a child. As written, House Bill 48 would allow a $1,000 personal income tax credit for any tax filers who adopt a child from Alabama. The credit would apply for any adoption of a child in Alabama's foster care system or in any private adoption where the agency, the adopting parents and the child all are from Alabama.
Adoptions after Jan. 1, 2014 would be eligible.
Federal tax law allows a federal tax credit of more than $12,000 per adoption.
The state credit would be refundable, meaning a qualified taxpayer would get the full amount, even if their tax liability before the credit was less than $1,000. Legislative fiscal analysts estimate the subsidy would cost about $2.5 million in personal income tax revenues the first fiscal year. Income tax receipts go to the state's education budget.
Lee and several lawmakers argued that the state saves money on adoptions once children are removed from the foster care system. But he also conceded that the credit wouldn't necessarily encourage more adoptions, meaning a credit might not actually yield cost savings.