WOTC NEEDS TO BE EXTENDED BY DECEMBER 31, 2019
Peter Cappelli Podcast
Dr. Peter Cappelli, Professor at the Wharton School of Business, has produced a podcast on the Work Opportunity Tax Credit (WOTC). Throughout the podcast, which runs about 14 minutes, Dr. Cappelli discusses the continued benefits and cost effectiveness of the program. To listen,
click on this link.
Recent House and Senate Action on WOTC
HOUSE ACTION ON WOTC EXTENSION:
On Thursday, June 20, the House Ways and Means Committee Reported H.R. 3301 The Tax Payer Certainty and Disaster Relief Act of 2019 which would:
Seamlessly extends WOTC through 2020, and retroactively extends through 2020 the Indian Employment Credit and Empowerment Zone hiring; and
Provide Disaster Tax Relief which would include an employee retention credit for all 2018 and 2019 federally declared disaster areas through 60 days after date of enactment.
During the Committee's consideration of H.R. 3301, Congressmen/woman Bill Pascrell (D-NJ), Danny Davis (D-IL), Terri Sewell (D-AL), Dwight Evans (D-PA), and Steven Horsford (D-NV) all spoke in support of WOTC
SENATE ACTION ON WOTC EXTENSION:
Also, during the Week of June 16, NEON filed its comments -
NEON WOTC Task Force Submission 06-17-19 (final).pdf - with the
Senate Finance Committee's tax extender's Task Force on Employment and Community Development and then testified before the Task Force. We emphasized WOTC's public assistance savings, employer acceptance of the program, the flexibility of the WOTC platform, program growth as a result of the five year PATH Act extension, and the need for a seamless permanent extension. We also discussed program improvements with an emphasis on the positive impact of lifting the age forty ceiling on WOTC eligibility for SNAP recipients. In addition, we referenced bills that have been introduced that would make eligible Transitional Foster Care Youth, S. 1651 and those on Social Security Disability Insurance, S. 255.
The Task Force was quite supportive of WOTC. We were asked about our savings estimates and why we don't get credit for them. We referenced our meeting between Dr. Cappelli and the head of the Joint Committee on Taxation during which we were told that they believe the program more than pays for itself. However, the Joint Committee recommended we speak with the Congressional Budget Office since the Joint Committee on Taxation only estimates the impact on revenues of changes to the tax law, and not the impact on spending programs. We explained that CBO can only estimate total annual program costs, but not how a program like WOTC impacts those costs.
The recent activity in both the House and Senate on extenders and disaster tax relief has been a very encouraging step in progress towards enactment. It is our understanding that House and Senate tax writers are actively engaging in negotiations on a final package that they hope to enact in the fall. It is important that
stakeholders continue to reach out to Congress and urge both enactment and co-sponsorship of S. 978 in the Senate and H.R. 2213 in the House. Go to the take action link above to urge members to co-sponsor. The more co-sponsors we have the more likely it is to achieve a long term extension.
According to Dr. Cappelli's studies:
● Employers respond to the tax incentive and change their hiring practices by targeting WOTC eligible individuals.
● The average WOTC hire stays on the job 2.3 years.
● WOTC saved states $3.5 B for FY 2018 in matching and administrative costs for welfare, food stamps, and Medicaid.
● The federal government receives an average net savings of $17,700 per individual just from TANF, SNAP, Medicaid and housing subsidies.
● WOTC is one of the most cost effective hiring programs ever enacted by Congress.
● Over a 10 year period, WOTC saves the federal government $167 B in TANF, SNAP, Medicaid and federal housing subsidies, and saves the states $35 B in TANF, SNAP and Medicaid payments.
● Cappelli Impact of Corporate Tax on Need for WOTC
● WOTC- 2013 study executive summary
● A Detailed Assessment of the Value of WOTC - Cappelli 2013 Study
● Assessing the Value of WOTC 1 Executive Summary
● Cappelli LTUE Study September 2015
● How WOTC Works
HOUSE APPROPRIATIONS FUNDING INCREASE FOR WOTC ADMINISTRATION:
NEON was also instrumental in securing a $2.5 M increase in WOTC administrative funding in the Labor HHS portion of the House passed Defense, the State Department, Energy and Water Development, and Labor, HHS spending bills, H.R. 2740. This would bring total administrative dollars for processing WOTC claims up to $22.3 M, a 12.6% increase which is more than the across the board 10% increase given to DOL. We are working with the Senate Labor HHS Subcommittee to secure a similar increase in the Senate bill.
Tax Extenders for 2017, 2018 and Disaster Relief Retention Credit
Congress continues to work on moving a tax extenders package for provisions that expired in 2017 and 2018 (Indian Employment Credit and Empowerment Zones) as well as Disaster Tax Relief, including a retention credit for employers located in communities that have been impacted by 2018 hurricanes, wildfires and mudslides.