[Congressional Record Volume 148, Number 53 (Thursday, May 2, 2002)]
[Extensions of Remarks]
[Page E678]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  A BILL TO ACCELERATE THE BASIC STANDARD DEDUCTION MARRIAGE PENALTY 
 RELIEF AND MODIFY THE WORK OPPORTUNITY TAX CREDIT AND THE WELFARE-TO-
                            WORK TAX CREDIT

                                 ______
                                 

                           HON. AMO HOUGHTON

                              of new york

                    in the house of representatives

                         Wednesday, May 1, 2002

  Mr. HOUGHTON. Mr. Speaker, today I am joined by my colleague from 
Illinois, Mr. Weller, in introducing our bill, the ``Encouraging Work 
and Supporting Marriage Act of 2002'' to accelerate the marriage 
penalty relief for low- and middle-income families and to modify and 
simplify the Work Opportunity Tax Credit (WOTC) and the Welfare-To-Work 
Tax Credit (WtW).
  Last year's tax law eliminates the marriage penalty in the standard 
deduction by gradually increasing the standard deduction for married 
couples beginning in 2005. The proposal would accelerate this relief by 
increasing the standard deduction beginning in 2003. The proposal would 
benefit low- and middle-income families and would simplify tax filing 
by reducing the number of taxpayers who itemize.
  After a number of improvements over the past few years, the WOTC and 
WtW programs are being well received in providing employment, with 
training, for our disadvantaged. We believe the WOTC and WtW programs 
have been very important in helping individuals become employed and 
make the transition from welfare to work. Such training can be costly, 
and the credits provide an incentive to employers to hire the 
disadvantaged and provide the needed training, while offsetting costs 
associated with the latter effort. However, the job is not over. These 
individuals are usually the first ones to suffer when we see economic 
conditions such as we have experienced the past year.
  The current WOTC provides employers with a graduated tax credit of 25 
percent of the first $6,000 in wages for eligible individuals working 
between 120 hours and 399 hours and a 40 percent tax credit on the 
first $6,000 in wages for those working over 400 hours. The WtW tax 
credit is targeted toward long-term welfare recipients--providing a 35 
percent tax credit on the first $10,000 in wages during the first year 
of employment and a 50 percent credit on the first $10,000 for those 
who stay on the job a second year.
  The proposal would make the following changes: (1) combine the two 
credits and establish WtW as a separate targeted group, (2) repeal the 
requirement that a qualified ex-felon be a member of an economically 
disadvantaged family for purposes of eligibility for the tax credit (a 
time-consuming requirement that discourages hiring from this group), 
(3) increase the age limit for qualified food stamp recipients by five 
years (from 18-24 to 18-29), and (4) standardize the definition of 
wages as ``cash wages'' paid by employer to a member of the targeted 
group.
  The present-law WOTC rules for calculating the credit would be 
retained for the eight categories currently eligible for the work 
opportunity tax credit. In the case of long-term family assistance 
recipients, i.e. the ninth targeted group, the credit would equal 40 
percent (25 percent for employment of less than 400 hours) of qualified 
first-year wages. Therefore the maximum credit would be $4,000 (40 
percent of $10,000) with respect to long-term family assistance 
recipients. In the second year, the maximum credit would be 40 percent 
of the first $10,000 of qualified second-year wages for the long-term 
family assistance recipients. The net effect of the change would 
increase the WtW credit by frontloading the benefits, thus increasing 
an employer's incentive to hire long-term Temporary Assistance for 
Needy Families (TANF) recipients. All of the provisions would be 
effective for wages paid or incurred for qualified individuals who 
begin work for an employer after December 31, 2002.
  We believe these changes will bring tax relief to low- and middle-
income families by accelerating the elimination of the marriage 
penalty, as well as strengthening the WOTC program, which has become a 
major factor in helping individuals become employed and make the 
transition from welfare to work. We urge our colleagues to support this 
legislation.

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