The Work Opportunity Tax Credit is estimated to have saved the US over $202 billion since 2014
Since its creation nearly 30 years ago as part of the Small Business Job Creation Act of 1996, the Work Opportunity Tax Credit (WOTC) has benefitted employers, disadvantaged job-seekers, and government agencies. Because it helps those three parties, it’s often referred to as a “win-win-win” program. That may explain why it enjoys bipartisan support in Washington, and has been extended 13 times.
Because we’ve specialized in delivering WOTC to deserving small businesses for over ten years, we could tell you endless feel-good stories about how it transforms businesses, gives great people second chances at building careers, and helps rehabilitate communities that have fallen on hard times. We understand, however, that all the feel-good stories in the world don’t justify bad tax policy. After all, Senator Mark Hanna from Ohio once said, “There are two things that are important things in politics. The first is money, and I can’t remember what the second one is.”
We’re tax professionals. We know that tax policy, like business policy, doesn’t last long if it doesn’t make economic sense. Some business owners hear that WOTC is set to expire at the end of 2025, and understandably wonder if investing in the program is worth it. This blog argues that these people shouldn’t worry, because WOTC will likely be extended for a 14th time.
Although the government doesn’t always make prudent financial decisions, WOTC is one example of dollars and cents making sense in DC. That’s because WOTC has saved the government an estimated $202 billion over the past decade.
To put that number in context–only one person in the world, Elon Musk, commands an estimated net worth of more than $202 billion.
WOTC works
WOTC provides tax credits for businesses and organizations who hire and retain certified applicants from one of nine disadvantaged target groups. The credits range from $1200-$9600. There is no maximum allowable credit. WOTC’s purpose is to incentivize employers to create quality career pathways for Americans who may otherwise rely on government resources to survive.
Since 1996, over 30 million WOTC certifications have been issued. Because the average WOTC employee earns their employers $2150 in tax credits, that means businesses have lowered their tax liability by a total of approximately $64.5 billion thanks to WOTC.
That may sound like a hefty price tag, but don’t forget that WOTC certifications are issued to employees who often use government programs including SNAP, TANF, unemployment, and more in order to get by. Because of this, each WOTC certification is estimated to save the government nearly $18,000. Multiply that amount by 30 million and you get over half a trillion dollars in saved government spending since 1996.
During that same time period, the federal deficit has grown from $107 billion to $1.52 trillion–an increase of 1321%! Considering that, it would be unwise to allow WOTC to expire after December 2025.
Quality careers, balanced budgets, big savings
By incentivizing employers to offer disadvantaged job-seekers new career opportunities, WOTC gives members of vulnerable groups, including veterans, ex-felons, the long-term unemployed, and more, new purpose, valuable skills, and higher earning potential. Because WOTC-eligible employees often come from low-resource backgrounds, giving these workers a leg up also improves vulnerable communities.
Placing WOTC-eligible people in jobs in turn helps control government spending, since many WOTC employees would otherwise rely on government programs to get by.
But as great as that all sounds, don’t forget that WOTC also benefits employers in big ways. All things considered, WOTC employees are 408% more profitable for their employers than non-WOTC employees. That’s why our clients regularly see their cash flow increase by over 40% after implementing our customizable and seamless WOTC solutions.
Because our fees are 100% contingent, there is no risk in getting started with WOTC today.
If you already claim WOTC by another means and would like to learn how we can get you more, schedule a call with one of our tax experts.
What could you accomplish with 40% more free cash? Find out with WOTC.