Congressman Aaron Schock (R-IL) along with New York City Congressman Charles Rangel has introduced bipartisan legislation to extend the Work Opportunity Tax Credit that is set to expire at the end of this year. The Work Opportunity Tax Credit (WOTC), a federal tax credit authorized by Congress, has played a vital role in providing assistance for individuals who are looking for work, but also receive public assistance from the government. The program assists individuals who fall within one of twelve categories who have historically faced significant barriers to employment and continues to serve as a principle part of the country’s welfare to work efforts since its introduction in the mid 1990’s.
As the economy continues to recover and jobs remain scarce, the WOTC has served as a critical link for job seekers who, in many cases to no fault of their own, are forced to seek government assistance once laid off, or are entering the job market for the first time, which is the case for many veterans. In April, the national unemployment rate stood at 9.0 percent, and in Illinois the state unemployment rate was at 8.7 percent.
“Unemployment across Illinois, and nationally, remains far too high. This extra tool will continue to assist and incentivize small businesses with hiring new employees,” said Schock. “This program is designed to help individuals who have fallen on bad luck or face other obstacles to employment and offers a way forward where there might not be another avenue.”
The Small Business Job Protection Act of 1996 first created the Work Opportunity Tax Credit program. The program has since been reauthorized and amended numerous times. Since 1996, more than 5.8 million people have left public assistance programs and have gained employment through the WOTC program. In 2010, there were 575,000 individuals hired through the program.
The WOTC is designed to move individuals from a position of public assistance to self-sufficiency as they seek employment to become more financially stable; which will ultimately benefit the individual as well as their family. Many WOTC jobs include work in the retail and hospitality industries. In return the employers who participate in the program are compensated by being able to reduce their federal income tax liability. Currently, participating employers can receive up to $2,400 for each new adult hire, the largest participating group are hires of members of families receiving benefits under the Temporary Assistance to Needy Families (TANF) program.
The tax credit is set to expire at the end of this year, but many believe that while unemployment remains at record high levels across the country extending this tax credit serves as a critical lifeline for individuals who may not be able to find work otherwise and are forced to seek additional government assistance. Schock’s legislation would extend the tax credit for three more years and in the process would expand the program to reach more unemployed veterans, many whom have faced a very difficult transition as they return to civilian life after their time in the military. Unemployment among returning veterans younger than 24 years of age was 14.1 percent in 2008, outpacing the general population’s rate of 11.6 percent for the same age group. The extension would also focus more attention on high risk youth and would speed up the time from when an employer hires a WOTC employee to when the tax credit is received. All this, Schock hopes, will put more people on a path to a steady income, a more stable family life and will reduce the amount spent on welfare to work programs.
The groups that WOTC assist include: Long-term TANF recipients, other TANF recipients, Veterans, 18-39 year old SNAP (food stamp) recipients, 18-39 year old designated community residents, 16-17 year-old summer youth, vocational rehabilitation referral, ex-felon’s, SSI recipients, Hurricane Katrina employee, Unemployed Veteran, and High Risk Youth.
Schock argues that extending this credit is a better solution to help individuals and families who currently receive TANF benefits and other assistance from government programs, but continue to find it difficult to find a better source of income that will allow them to become more self-sustaining. “I don’t believe we should be relying on the federal government to be the national job creator, but there are things the government can do to help incentivize businesses during the hiring process,” said Schock. “Extending the Work Opportunity Tax Credit is the responsible thing to do especially with unemployment remaining at unacceptably high levels. This credit can be the difference between someone who has lost hope in finding a job and getting them back on their feet again. At the end of the day, no one wins when we have people who are willing and capable of working hard, but are unable to find a job.”
Read the full story here: http://schock.house.gov or http://rangel.house.gov