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Four states have approved new tax credits or deductions that allow taxpayers to claim unborn children. Nearly a dozen are expected to follow. But do these laws actually help expectant mothers?
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Welcome back to Route Fifty’s Public Finance Update! I’m Liz Farmer and this week I’m writing about how some states are following up their abortion bans by doling out new tax credits and deductions for pregnant moms and anti-abortion centers.
They’re controversial, to say the least. Critics argue that they do little to actually help expectant parents. And proponents frame the bills as providing women the support they need to pursue alternatives to abortion.
At least four states have approved these new tax exemptions, but nearly a dozen more are considering them. Georgia’s law, which took effect last year along with the state’s abortion ban, allows a taxpayer to claim an “unborn child (or children) with a detectable human heartbeat (which may occur as early as six weeks’ gestation),” as a dependent personal exemption. Utah enacted a similar law this year as part of a $400 million tax cut package that also included tax credits for adoptions.
Those two laws don’t go as far as proposed legislation in Congress and several other states that expand the child tax credit to fetuses with a detectable heartbeat. Supporters of those efforts say doing so gives parents a head start on saving and investing in their child.
“Expecting parents begin providing and preparing for their child the minute they learn they're having a baby—the child tax credit should reflect the fact that unborn children are children too,” U.S. Sen. Steve Daines, a Republican from Montana, said in a press release. "From prenatal care to stocking up on baby supplies, this tax relief will help parents prepare for the arrival of their baby."
Louisiana and Missouri passed laws that incentivize donations to crisis pregnancy centers, which are nonprofits that seek to dissuade women from having abortions. The centers are not staffed by doctors or nurses but offer free pregnancy tests, nondiagnostic ultrasounds, parenting classes and material needs, such as baby clothes.
Both laws provide up to $5 million in tax credits per year to cover up to half of a tax filer’s contribution of up to $5,000. While donations to the centers are already tax deductible, the tax credit further incentivizes philanthropy by giving money back to taxpayers.
Louisiana state Sen. Beth Mizell, who sponsored the tax credit legislation, pointed to the fact that the state has among the worst maternal and infant mortality rates in the country and that the centers put pregnant people “on the path to good prenatal care, and actually postpartum care.”
But critics argue that both types of tax exemptions are ineffective and essentially amount to virtue-signaling by lawmakers who oppose abortions.
According to the nonpartisan Urban-Brookings Tax Policy Center, the most that Georgia families could get from its unborn child tax credit is $150 in tax savings. And while crisis pregnancy centers stand to benefit greatly from increased donations, there are few guardrails on how that money is spent and no guarantees that the increased donations will directly help parents and their children.
“A lot of these [bills] are communicating to voters that the legislators oppose abortion and also want to be seen as helping expected families,” said Lillian Hunter, a research assistant at the Tax Policy Center. “But they provide meager benefits both in terms of tax savings and in the support that a crisis pregnancy center could give someone.”
If the states wanted to help families more directly, she added, they could implement already-proven policies such as expanding the earned income tax credit, expanding Medicaid or passing paid family leave. For its part, Utah’s tax legislation did include an expansion of the EITC. But advocates for lower-income families said that law’s most expensive line item—the income tax cut—would have been better spent on social services.
Miscarriages and Tax Forms
The tax exemption for fetuses is the most controversial tax law response to the U.S. Supreme Court ruling in Dobbs v. Jackson Women’s Health Organization, which paved the way for 13 states to effectively ban abortion. The reason, critics argue, is that the response could be abused, may feel invasive and could cause harm.
For example, Georgia’s law does not require documentation to claim the deduction on tax forms. And filers who have had a miscarriage or stillborn baby are still allowed to claim the deduction. But documentation of that miscarriage is required in the event of an audit, which could create additional trauma for women after suffering the already traumatic event of losing a baby. Utah’s tax credit gets around that by providing a double credit in the child's first year. But, in a sense, that punishes those who are not able to carry to full term.
Complicating matters further, some worry that women who claim the exemption for a miscarriage could be accused of getting an abortion. That’s because the medical treatment for women in both situations looks very similar, if not identical during the early months.
“I think there's a lot of potential for harm that could come from the additional surveillance of adding this information to a government document, asking people to give a paper trail of their pregnancy directly to the state government,” Kwajelyn Jackson, executive director at Feminist Women's Health Center in Atlanta, told Yahoo! Finance.
Other Post-Dobbs Tax Credits?
What’s more, these laws are likely just the beginning of the state tax policy response in states that have outlawed abortion, according to the Tax Policy Center’s Hunter.
For example, she said, Texas has considered banning state tax incentives for businesses that pay for an employee’s abortion in another state.
Adoption tax credits are also being discussed in a number of states, including Louisiana and West Virginia. Lawmakers in the Pelican State have also proposed a tax credit worth up to $50,000 for donations to organizations that prevent child abuse, provide parenting classes to fathers, give books to low-income households and assist families of children with disabilities or chronic illnesses.
“A lot of these bills seem to be classic message bills designed to tell voters that their sponsors oppose abortion,” Hunter said. “Many of [them] are not expected to pass the legislature and be signed into law.”
NEXT STORY: IRS seeks states’ input on its direct file pilot