I

103D CONGRESS

2D SESSION H. R. 4512

To amend the Internal Revenue Code of 1986 to provide employers a

refundable credit for hiring AFDC recipients.

IN THE HOUSE OF REPRESENTATIVES

MAY 26, 1994

Mr. GEJDENSON introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

employers a refundable credit for hiring AFDC recipients.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Welfare to Work Act

5 of 1994’’.

6 SEC. 2. SENSE OF THE CONGRESS.

7 It is the sense of the Congress that—

8 (1) the lack of entry level jobs which lead to

9 permanent gainful employment is a significant im-
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1 pediment to the ability of welfare recipients to enter

2 the workforce;

3 (2) even the healthiest economy would be hard4 pressed to create the requisite number of entry level

5 jobs necessary to provide permanent employment to

6 a significant percentage of AFDC recipients;

7 (3) funds which are currently spent for AFDC

8 payments would have greater economic value if ex9 changed for work;

10 (4) ‘‘make work’’ government workfare pro11 grams to require work to exchange for AFDC pay12 ments are no substitute for experience in the private

13 sector, which develops valuable skills and can lead to

14 permanent, gainful employment; and

15 (5) in order to break the cycle of welfare, maxi16 mize the economic value of AFDC payments by ex17 changing them for work, provide AFDC recipients

18 with a pathway to permanent, gainful employment,

19 and support the efforts to business to hire AFDC re20 cipients, a one-year tax credit should be extended to

21 businesses for wages paid to employees whose em22 ployment results in a termination of AFDC eligi23 bility.
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1 SEC. 3. REFUNDABLE CREDIT FOR HIRING AFDC RECIPI2 ENTS.

3 (a) IN GENERAL.—Subpart C of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to refundable credits) is amended by redes6 ignating section 35 as section 36 and by inserting after

7 section 34 the following new section:

8 ‘‘SEC. 35. EMPLOYMENT OF AFDC RECIPIENTS.

9 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al10 lowed as a credit against the tax imposed by this subtitle

11 for the taxable year an amount equal to the sum of—

12 ‘‘(1) 50 percent of qualified first-year wages to

13 the extent such wages do not exceed $6,000, plus

14 ‘‘(2) 25 percent of such wages to the extent

15 such wages exceed $6,000 but do not exceed

16 $12,000.

17 ‘‘(b) QUALIFIED FIRST-YEAR WAGES.—For purposes

18 of this section—

19 ‘‘(1) IN GENERAL.—The term ‘qualified first20 year wages’ means, with respect to any individual,

21 qualified wages attributable to services rendered dur22 ing the 1-year period beginning with the day the in23 dividual begins work for the employer.

24 ‘‘(2) LIMITATION IF CREDIT ALLOWED TO

25 OTHER EMPLOYER.—The 1-year period referred to

26 in paragraph (1) shall be reduced (but not below
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1 zero) by the aggregate of the prior periods the indi2 vidual rendered services for other employers to the

3 extent the wages for such periods were taken into

4 account as qualified first-year wages by any other

5 employer and such periods exceeded 12 months in

6 the aggregate.

7 ‘‘(3) QUALIFIED WAGES.—The term ‘qualified

8 wages’ means wages paid or incurred by the em9 ployer during the taxable year to qualified former

10 AFDC recipients.

11 ‘‘(4) WAGES.—Except as provided in subsection

12 (d)(4), the term ‘wages’ has the meaning given such

13 term by section 51(d) (determined without regard to

14 paragraph (4) thereof).

15 ‘‘(c) QUALIFIED FORMER AFDC RECIPIENT.—For

16 purposes of this section, the term ‘qualified former AFDC

17 recipient’ means any individual if such individual is cer18 tified by the designated local agency (as defined in section

19 51(d)(15))—

20 ‘‘(1) as being a member of a family with respect

21 to which benefits were being paid under a State plan

22 approved under part A of title IV of the Social Secu23 rity Act immediately before such individual’s employ24 ment with the employer, and
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1 ‘‘(2) whose wages from the employer are suffi2 cient to render such family ineligible for such bene3 fits.

4 Such term shall not include any individual who is a mem5 ber of a targeted group (as defined in section 51(d)).

6 ‘‘(d) PROHIBITION ON REPLACING EXISTING WORK7 ERS FOR PURPOSES OF OBTAINING CREDIT.—No credit

8 shall be allowed by this section for wages paid to a quali9 fied former AFDC recipient who replaces an employee

10 whose performance is satisfactory and who is terminated

11 without cause.

12 ‘‘(e) CERTAIN DEFINITIONS AND SPECIAL RULES TO

13 APPLY.—Rules similar to the rules of subsections (d)(16),

14 (f), (g), (h), (i), (j), and (k) of section 51, and section

15 52, shall apply for purposes of this section.’’

16 (b) TECHNICAL AMENDMENTS.—

17 (1) Subsection (a) of section 280C of such Code

18 (relating to certain expenses for which credits allow19 able) is amended by inserting ‘‘35(a),’’ before

20 ‘‘45(a)’’.

21 (2) Paragraph (2) of section 1324(b) of title

22 31, United States Code, is amended by inserting be23 fore the period ‘‘or from section 35 of such Code’’.

24 (3) The table of sections for subpart C of part

25 IV of subchapter A of chapter 1 of such Code is
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1 amended by striking the last item and inserting the

2 following new item:

‘‘Sec. 35. Employment of AFDC recipients.

‘‘Sec. 36. Overpayments of tax.’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to individuals who begin work for

5 the employer after the date of the enactment of this Act.

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