April 17, 2017 - Weekly Legislative Update
Bipartisanship on Tax Reform Blooms in Washington
Congress adjourned for an Easter work period and won't return till April 25th. In the meantime, recent actions were favorable for WOTC as positive signs of bipartisanship on tax reform emerged in both White House and Congress. This gives the many House Democrats who support WOTC, including their most senior members on Ways and Means, a voice in the final draft of tax reform.
Nevertheless, WOTC continues to swim uphill in the House where both Speaker Ryan and Ways and Means chairman Brady have taken positions favoring elimination of tax credits like WOTC. Their problem is acute because they're more than a trillion dollars short of funds needed to cut the corporate tax rate to their goal of 20 percent. Even worse, many senators are saying a border tax on imports cannot pass, thus losing another trillion and aggravating our problem of persuading Ryan and Brady not to terminate WOTC.
If WOTC isn't in the chairman's mark Brady will bring to Ways and Means, our danger is WOTC may not pass the House and we'll be thrown back on the Senate to hold the line for WOTC. In the Senate, our usual Democratic support will be potent in the conference that writes the final bill, but won't be as strong on the floor because Republicans will use budget reconciliation to pass the bill with a simple majority.
These are large obstacles, but if we work hard they can be overcome. The key to success in the House is winning support of a block of influential Republicans, coupled with Democratic leaders who'll lead the fight in Ways and Means and later on the House floor. We can count on the tax reform bill being so highly controversial that Democratic votes will be needed to pass, so we'll have an opportunity to position ourselves with key Democrats, including Leader Pelosi, to demand permanent WOTC when negotiating with Republicans for Democratic support on the final vote.
We are early in this process, but last week into the mix came welcome blooms of bipartisanship showing Democrats and Republicans talking:
· Declaring the White House will be "driving the train" for tax reform, the president's spokesman Sean Spicer said key stakeholders-including Democrats-are now being consulted, after which the President will outline principles for tax reform, which he prefers to call "the middle class tax cut."
· Marc Short, White House director of legislative affairs, met with centrist Democrats in the House, known as "Blue Dogs," to get their views on tax reform. Major infrastructure spending and "distributional equity"-making sure low and middle classes retain the same parity with higher classes of taxpayers-were high on Democrats' agenda.
· Treasury Secretary Steven Mnuchin met with the 35 members of the "Problem Solvers Caucus," a bi-partisan group of House members committed to finding areas of agreement on key issues like taxes and infrastructure. Congressman Tom Reed (R-NY) and Congressman Josh Gottheimer (D-NJ) are co-chairs of Problem Solvers Caucus, and members are: Mike Coffman (R-CO), Jim Costa (D-CA), Ryan Costello (R-PA), Charlie Crist (D-FL), Carlos Curbelo (R-FL), Charlie Dent (R-PA), Elizabeth Esty (D-CT), Brian Fitzpatrick (R-PA), Mike Gallagher (R-WI), Vicente Gonzalez (D-TX), Lynn Jenkins (R-KS), Bill Johnson (R-OH), David Joyce (R-OH), Kohn Katko (R-NY), Adam Kinzinger (R-IL), Daniel Lipinski (D-IL), Thomas MacArthur (R-NJ), Patrick Meehan (R-PA), Stephanie Murphy (D-FL), Rick Nolan (D-MN), Tom O'Halleran (D-AZ), Scott Peters (D-CA), Jared Polis (D-CO), Ileana Ros-Lehtinen (R-FL), Jacky Rosen (D-NV), Brad Schneider (D-IL), Kurt Schrader (D-OR), Darren Soto (D-FL), Thomas Suozzi (D-NY), Glenn "GT" Thompson (R-PA), Fred Upton (R-MI), Peter Welch (D-VT), David Young (R-FL).
Let's congratulate these lawmakers for working across partisan lines and opening communications with the White House, reminding them that the Earned Income Tax Credit and Work Opportunity Tax Credit, working together, form a core component of the nation's anti-poverty programs because they're aimed at lifting the poor and homeless, welfare and food stamp recipients, through work.
Last week also saw important efforts toward bi-partisanship in Congress:
- Ways and Means Chairman Kevin Brady met with Democrats on Ways and Means and with the "New Democratic Coalition," a group of about sixty moderate Democrats. Brady confirmed he'll move the bill via budget reconciliation, that it'll be framed as a middle class tax cut, and that "dynamic scoring" will be used to estimate the revenue effects of the bill. ("Dynamic scoring" uses feedback effects of a tax cut on the economy when scoring a statutory change for revenues gained or lost.) Democrats suggested "dynamic scoring" be used for infrastructure spending too, and Brady agreed.
- Congressman Jim Himes (D-CT), chairman of the New Democratic Coalition, hailed a promise by Brady to proceed in a "collaborative" way toward tax reform, meaning that Democrats will participate and be consulted. In the hurly burly of politics often such promises come to naught, but to the extent Democrats have a voice in writing the House bill, it's a promising development for WOTC.
- For the first time, Chairman Brady committed to hearings on the tax reform bill he and Speaker Ryan have been pushing-described online at www.abetterway.speaker.gov. These hearings will be held by the Tax Policy Subcommittee chaired by Congressman Peter Roskam, who promises a hearing announcement soon.
It's imperative that Coalition members begin now to prepare their statements and letters supporting permanent WOTC for submission online as part of the hearing record of Ways and Means. Besides our own statement, WOTC Coalition will join in the statements of WOTC's lead sponsor, Congressman Tom Reed, and that of the National Employment Opportunities Network, The Military Coalition, and National Association of Governors Committees On Employment of People With Disabilities.
Finally, WOTC was in the news last week as bills were introduced make "transitioning foster youth" a WOTC target group. In the House, H.R. 2060 was introduced by Congressman Dave Reichert (R-WA), co-sponsored by Congressmen Tom Reed (D-NY) and Danny Davis (D-IL). Congressman Reichert is fifth-ranking Republican member on Ways and Means, and second-ranking on the Tax Policy Subcommittee responsible for tax reform. He didn't co-sponsor Congressman Reed's bill to make WOTC permanent last year, but we're looking for their coming together during tax reform on behalf of foster youth and permanent WOTC.
A companion bill on foster youth, S.885, sponsored by Finance Committee Democrats Bob Casey and Ben Cardin, was introduced in the Senate. We are still working for a Senate co-sponsor.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) was create in 1996 to encourage employers to hire various groups of people with barriers to employment, among them people with disabilities who have been referred to an employer by state vocational rehabilitation agencies or those receiving Supplemental Security Income (SSI). The VOW to Hire Heroes Act, signed in 2011, amplified WOTC by significantly increasing the financial incentives to employers for hiring veterans, including veterans with disabilities. Department of Labor (DOL) statistics show that a total of 35,904 veterans were certified for WOTC during the three-year period before the VOW Act. By contrast, 278,611 veterans were certified during FY 2013-15, and increase of more that 700 percent. Currently, the annual rate of WOTC veterans' hiring is 123,00 a year and the large majority of these are Gulf War II Era veterans. WOTC is clearly working for many veterans.
Last December, Congress extended WOTC and VOW Act veterans' credits for five years. However, the repeated retroactive renewals to which these tax credits are subjected causes a great deal of uncertainty in the employer community. TIA believes WOTC could be even more effective if it was authorized as a permanent part of a reformed tax code. TIA also believes that WOTC could be improved by expanding its reach to encompass more individuals with disabilities such as broadly applying to all those on Title II Social Security Disability Insurance (SSDI).
Impairment Related Work Expense Deduction
Under current law, people with disabilities may deduct from their taxes those impairment related work expenses (IRWE) necessary to earn a living. A problem with the present IRWE is that it only includes expenses incurred while at work, not expenses necessary to get to work such as transportation or personal attendant services. Moreover, this deduction is only available to those who itemize their taxes, most of whom are middle and upper income filers. PVA encourages the committee to explore enhancements to the IRWE deductions that would enable more people with disabilities to utilize it to return to work.
Architectural and Transportation Barrier Removal Deduction (Section 190) Disabled Access Credit (Section 44)
Section 190 of the IRS code allows for the annual deduction of up to $15,000 of the costs of qualifying modifications to public facilities or transportation vehicles used in connection with a trade or business to make them more accessible to people with disabilities. Examples of qualifying capital improvements include providing accessible parking spaces, ramps, and curb cuts; providing telephones, water fountains and restrooms accessible to wheelchair users; and making walkways at least 48 inches wide. Unfortunately, this deduction has not been updated since 1990 and does not cover things such as communication and electronic barriers applicable to modern workplaces and places of business.
Section 44 of the IRS code was created in 1990 as a refundable tax credit to enable small businesses (defined as 30 or fewer employees or cross receipts of $1 million or less from the previous year) to make modifications to comply with the Americans with Disabilities Act (ADA). The credit applies to 50% of eligible expenditures between $250 and $10,250 up to a maximum of $5,000 and applies only to renovations of buildings, not costs related to accessibility measures including provision of qualified interpreters or other methods of making audio materials available to deaf or hard of hearing individuals, provision of qualified readers, taped texts, and other methods of making visual materials available to individuals with visual impairments or acquisition or modification of equipment or devices for individuals with disabilities. Regrettably, a GAO report from some years ago found that very few corporations and individuals with a business affiliation filed for the credit. GAO also found widespread ignorance of the credit and confusion about its application had limited its use.
Granted, commercial enterprises have been expected to comply with the ADA for over 25 years and any new facilities or transportation vehicles built or purchased since then should be in compliance with the ADA irrespective of these tax breaks. However, for businesses in existence prior to 1990 or those companies undertaking major redevelopment, the deduction and the credit can assist them in following the law. TIA believes that updating a publicizing these tax provisions could help entities covered by the ADA to conform to this longstanding civil rights law.