Welfare to Work Act of 1994

Summary: Welfare to Work Act of 1994 - Amends the Internal Revenue Code to allow a refundable credit for the hiring of qualified former recipients of Aid to Families with Dependent Children (AFDC) under title IV of the Social Security Act. 
Prohibits replacing existing workers in order to obtain such credit.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Welfare to Work Act of 1994''.

SEC. 2. SENSE OF THE CONGRESS.

    It is the sense of the Congress that--
            (1) the lack of entry level jobs which lead to permanent 
        gainful employment is a significant impediment to the ability 
        of welfare recipients to enter the workforce;
            (2) even the healthiest economy would be hard-pressed to 
        create the requisite number of entry level jobs necessary to 
        provide permanent employment to a significant percentage of 
        AFDC recipients;
            (3) funds which are currently spent for AFDC payments would 
        have greater economic value if exchanged for work;
            (4) ``make work'' government workfare programs to require 
        work to exchange for AFDC payments are no substitute for 
        experience in the private sector, which develops valuable 
        skills and can lead to permanent, gainful employment; and
            (5) in order to break the cycle of welfare, maximize the 
        economic value of AFDC payments by exchanging them for work, 
        provide AFDC recipients with a pathway to permanent, gainful 
        employment, and support the efforts to business to hire AFDC 
        recipients, a one-year tax credit should be extended to 
        businesses for wages paid to employees whose employment results 
        in a termination of AFDC eligibility.

SEC. 3. REFUNDABLE CREDIT FOR HIRING AFDC RECIPIENTS.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 35 as section 36 and by inserting 
after section 34 the following new section:

``SEC. 35. EMPLOYMENT OF AFDC RECIPIENTS.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this subtitle for the taxable year an amount 
equal to the sum of--
            ``(1) 50 percent of qualified first-year wages to the 
        extent such wages do not exceed $6,000, plus
            ``(2) 25 percent of such wages to the extent such wages 
        exceed $6,000 but do not exceed $12,000.
    ``(b) Qualified First-Year Wages.--For purposes of this section--
            ``(1) In general.--The term `qualified first-year wages' 
        means, with respect to any individual, qualified wages 
        attributable to services rendered during the 1-year period 
        beginning with the day the individual begins work for the 
        employer.
            ``(2) Limitation if credit allowed to other employer.--The 
        1-year period referred to in paragraph (1) shall be reduced 
        (but not below zero) by the aggregate of the prior periods the 
        individual rendered services for other employers to the extent 
        the wages for such periods were taken into account as qualified 
        first-year wages by any other employer and such periods 
        exceeded 12 months in the aggregate.
            ``(3) Qualified wages.--The term `qualified wages' means 
        wages paid or incurred by the employer during the taxable year 
        to qualified former AFDC recipients.
            ``(4) Wages.--Except as provided in subsection (d)(4), the 
        term `wages' has the meaning given such term by section 51(d) 
        (determined without regard to paragraph (4) thereof).
    ``(c) Qualified Former AFDC Recipient.--For purposes of this 
section, the term `qualified former AFDC recipient' means any 
individual if such individual is certified by the designated local 
agency (as defined in section 51(d)(15))--
            ``(1) as being a member of a family with respect to which 
        benefits were being paid under a State plan approved under part 
        A of title IV of the Social Security Act immediately before 
        such individual's employment with the employer, and
            ``(2) whose wages from the employer are sufficient to 
        render such family ineligible for such benefits.
Such term shall not include any individual who is a member of a 
targeted group (as defined in section 51(d)).
    ``(d) Prohibition on Replacing Existing Workers For Purposes of 
Obtaining Credit.--No credit shall be allowed by this section for wages 
paid to a qualified former AFDC recipient who replaces an employee 
whose performance is satisfactory and who is terminated without cause.
    ``(e) Certain Definitions and Special Rules To Apply.--Rules 
similar to the rules of subsections (d)(16), (f), (g), (h), (i), (j), 
and (k) of section 51, and section 52, shall apply for purposes of this 
section.''
    (b) Technical Amendments.--
            (1) Subsection (a) of section 280C of such Code (relating 
        to certain expenses for which credits allowable) is amended by 
        inserting ``35(a),'' before ``45(a)''.
            (2) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``or 
        from section 35 of such Code''.
            (3) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by striking 
        the last item and inserting the following new item:

                              ``Sec. 35. Employment of AFDC recipients.
                              ``Sec. 36. Overpayments of tax.''
    (c) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after the date of 
the enactment of this Act.