Stacey May, Manager, Tax Credit Program, Honkamp Krueger & Co., P.C., Dubuque, IA
According to the Department of Labor, the unemployment rate for veterans ages 18 to 24 in 2010 was 20.9 percent. Even more astonishing is that veterans, as a whole, accounted for a total 1,020,000 people looking for work in the United States. To make matters worse, on October 5, Federal Reserve Chairman, Ben Bernanke warned, while addressing Congress, that the economic recovery, as it currently stands, “is close to faltering.” He later stated, “We need to make sure that the recovery continues and doesn’t drop back and that the unemployment rate continues to fall.”
To sum it up, we need action, action to keep this economic recovery going and action to make sure businesses continue to hire, otherwise, the unemployment rate for veterans and the country as a whole will continue down a path toward higher unemployment and further economic turmoil. I believe the core part of the action needed to sustain a continued recovery is a permanent employment tax credit that incentivizes businesses to hire. The Work Opportunity Tax Credit (WOTC) does just that.
The WOTC program is a perfect example of a successful government program that rewards businesses for hiring employees from certain groups that have consistently faced barriers in seeking employment. These groups, known as target groups, include veterans, people on government assistance, the disabled and ex-offenders. According to the Department of Labor, the WOTC program processed 849,868 certificates in fiscal year 2010 that allowed employers to claim the tax credit on their income tax return. Currently, employers that hire qualifying employees generally may be eligible for a one-year federal income tax credit worth anywhere from $1,200 to $4,800 and in some cases a two-year credit worth up to $9,000. Unfortunately, the WOTC program is set to expire at the end of the year, December 31, 2011, which would be an additional blow to the veteran community when seeking employment.
I believe that we can get our unemployed veterans back to work with the WOTC program by making three changes.
- Make the Work Opportunity Tax Credit permanent
- Since its creation in 1996, the WOTC program has been up for renewal eight times. By making the program permanent, it would add stability in the hiring process.
- Expand the program by adding a target group for hiring unemployed veterans
- President Obama mentioned this in his proposed American Jobs Bill, naming it the Returning Heroes Tax Credit. It would allow unemployed veterans to qualify their employer for WOTC.
- Increase the maximum tax credit amount an employer may receive for hiring qualified veterans.
- Increasing the tax credit amount would further incentivize employers to hire veterans.
The unemployment rate for the veterans in our country is too high. We need action by our leaders in Washington to help veterans who served our country get back to work. With modifications to the WOTC program, such as making the WOTC program permanent, creating an unemployed veterans target group, and increasing the tax credit for hiring veterans, it will not only fuel employers to create jobs, it will fuel employers to hire our brave veterans.