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Status of WOTC under the new administration

February 16, 2017

By Stacey May, Director of Tax Credits

Now that President Trump is moving forward with his policy agenda and tax reform seems inevitable, it will be critical for proponents of the Work Opportunity Tax Credit (WOTC) to push this credit as a modern, consistent and flexible tool in line with his goals. WOTC is designed to help those in government entitlement programs transition into productive members of the workforce. As a result, this transition reduces the overall amount of entitlement spending, which is necessary to keep tax rates down across the board.

Because WOTC is a well-established program with almost zero instances of fraud, it would not be easy to replace with new, untested policy tools. Its continuation ensures both federal and state governments keep spending at much lower rates than they would otherwise. According to Economist Dr. Peter Cappelli, there is a 17:1 benefit (and much more for some target groups) for the amount of government spending reduced by WOTC compared to credit given.

As evidenced by the recent addition of the long-term unemployed target group, WOTC can be tweaked and modified to suit current policy needs and goals. Any easily identifiable and verifiable demographic group that has low job prospects and high numbers on government entitlement rolls is a prime target for WOTC’s assistance. Furthermore, the integration of new-target groups into WOTC’s existing framework would require only marginal work compared to establishing entirely new government programs.

Not including WOTC as a permanent part of tax reform would result in a variety of problems for American workers, American businesses and result in high government spending. The benefits outweigh the costs for both federal and state governments in poverty reductions and increases in private sector employment. WOTC is currently the only tool that has proven to help the historically underemployed get back to work for American companies, and also result in large reductions in government spending.

For more information or assistance on WOTC and employment tax credits, call 888-556-0123, email taxcreditrep@hkpayroll.com or submit our online form.

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