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NASBO Touts Savings to States from WOTC

The National Association of State Budget Officers (NASBO) is highlighting a new study from an economist with the Wharton School of business showing that states collectively save $1.7 billion a year because of WOTC:

At the end of 2013, more than 50 temporary tax breaks expired and have yet to be renewed. Among them is the Work Opportunity Tax Credit (WOTC), a program that was originally enacted as part of the 1996 welfare reform law. The WOTC is a federal tax credit available to employers who hire individuals from certain target populations who face significant barriers to employment, such as veterans and recipients of public assistance like Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), and Supplemental Security Income (SSI). According to a study conducted by a labor economist at the Wharton School at the University of Pennsylvania, the WOTC saves states $1.7 billion collectively in annual matching and administrative costs for TANF, SNAP and Medicaid, by encouraging employers to hire individuals who receive benefits under these programs. As these individuals gain employment and increase their wage earnings, many are able to roll off of these public assistance programs, thus producing the savings to states. The study also found that the federal government achieves average net savings of roughly $17,700 per individual hired due to the WOTC program. Legislation has been introduced in the House by Representatives by Aaron Shock (R-IL) and Charlie Rangel (D-NY) to make the WOTC permanent (HR 5264), while a bill approved by the Senate Finance Committee would extend the WOTC, along with the other expired tax breaks, for two more years (S 2260). Lawmakers in the House and Senate are expected to debate the renewal of expired tax extenders, which have been regularly renewed in past years, during the lame duck session following the mid-term elections. To learn more about the study on state and federal savings resulting from the WOTC, you can read the federal-level study, an explanation of the state-level computations, and a summary table with the state-by-state savings estimates. The National Employment Opportunity Network (NEON), an advocacy organization, has further information about the study and background on the WOTC on its website.

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