Biden Administration Legislative Agenda and WOTC Enhancement Prospects

Infrastructure and Reconciliation

President Biden’s legislative agenda calls for significant spending on infrastructure which, within the context of his plan, includes a wide variety of programs. Ideally, the President would prefer to pass a bipartisan bill. But while Republicans are willing to agree to spending on “hard infrastructure” such as roads and bridges, they are unwilling to agree to various “human infrastructure” programs such as child care, education, and clean energy.

Democrats are therefore pursuing a two-pronged legislative strategy: a bipartisan infrastructure bill with a framework agreed to by a group of bipartisan Senators, and a budget reconciliation bill for the remainder of Democrats’ priorities.

Bills generally require some level of bipartisan support because the Senate requires 60 votes to pass legislation. Budget reconciliation bills, on the other hand, can be passed with just 51 votes in the Senate, but there are limits to what can be legislated using this process. Since Democrats control 50 seats in the Senate, they can pass a reconciliation bill without any Republican support since the Vice President breaks any tied votes.

Given Republican opposition to the contents of the reconciliation bill, there is a delicate balancing act between these two legislative processes. The more Democrats link passage of the infrastructure bill to the passage of the reconciliation bill, the more likely they are to lose the necessary Republican votes to pass an infrastructure bill.

Timing

In a letter to fellow Senators on July 9, 2021, Senate Majority Leader Chuck Schumer wrote:

“My intention for this work period is for the Senate to consider both the bipartisan infrastructure legislation and a budget resolution with reconciliation instructions, which is the first step for passing legislation through the reconciliation process. Please be advised that time is of the essence and we have a lot of work to do. Senators should be prepared for the possibility of working long nights, weekends, and remaining in Washington into the previously-scheduled August state work period.”

WOTC Proposals

There are two serious proposals to expand the Work Opportunity Tax Credit that some lawmakers are hoping to include in the budget reconciliation bill.

As Senate Majority Whip, Senator Richard Durbin (D-IL) is ranked second in the Senate majority leadership and therefore has a powerful voice in what ultimately materializes as legislation. He has sponsored S.1560 (previously discussed here) to expand WOTC to encourage the hiring of young workers. The “HERO for Youth Act” would expand the target group currently known as “Summer Youth” to apply to year-round employment for students and increase the value of that credit from $1,200 to $2,400. The bill would also add an additional target group, “disconnected youth.” The proposed target group is roughly equivalent to a WOTC target group of the same name that was available during 2009-2010 but expanded to include eligible foster youth.

Press Release from Senator Durbin about the HERO for Youth Act.

A group of five Ways and Means Committee members, Representatives Tom Suozzi (D-NY), Steven Horsford (D-NV), Don Beyer (D-VA), Brad Schneider (D-IL), and Gwen Moore (D-WI), have introduced H.R. 3449 (previously discussed here) to temporarily increase the value of WOTC as part of the pandemic economic recovery process. The proposed changes would be effective for two years from the passage after which the tax credit would revert to its current form.

Currently, WOTC provides a tax credit of 40% of the first $6,000 of wages, or $2,400 in most cases. The current credit is generally limited to wages paid in the first year of employment. The new bill proposes increasing that credit to 50% of the first $10,000 in wages, and to allow an additional credit of 50% of $10,000 in the second year of employment.

The legislation would also temporarily suspend the restriction against claiming WOTC for rehires.

Press release regarding the Hiring Incentive to Return Employment (HIRE) Act.

As these two bills utilize WOTC to address completely different issues, it is possible that one or even both proposals may be included in a final reconciliation bill.

Learn more about the Work Opportunity Tax Credit (WOTC).

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