pediment 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 ex-
changed for work;
(4) ‘‘make work’’ government workfare pro-
grams to require work to exchange for AFDC pay-
ments 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, maxi-
mize the economic value of AFDC payments by ex-
changing them for work, provide AFDC recipients
with a pathway to permanent, gainful employment,
and support the efforts to business to hire AFDC re-
cipients, a one-year tax credit should be extended to
businesses for wages paid to employees whose em-
ployment results in a termination of AFDC eligi-
bility.
SEC. 3. REFUNDABLE CREDIT FOR HIRING AFDC RECIPI-
ENTS.
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to refundable credits) is amended by redes-
ignating 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 al-
lowed 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 dur-
ing the 1-year period beginning with the day the in-
dividual 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 indi-
vidual 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 em-
ployer 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 cer-
tified 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 Secu-
rity Act immediately before such individual’s employ-
ment with the employer, and
‘‘(2) whose wages from the employer are suffi-
cient to render such family ineligible for such bene-
fits.
Such term shall not include any individual who is a mem-
ber of a targeted group (as defined in section 51(d)).
‘‘(d) PROHIBITION ON REPLACING EXISTING WORK-
ERS FOR PURPOSES OF OBTAINING CREDIT.—No credit
shall be allowed by this section for wages paid to a quali-
fied 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 allow-
able) 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 be-
fore 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.
Æ