Bipartisan Momentum Grows for Employment Tax Break Expansion (1)

Lawmakers and advocates for employers that hire workers who typically struggle to find a job are joining forces, in hopes of preventing the expiration of a tax credit that has bipartisan backing.

Key lawmakers in both parties and chambers are introducing legislation that combines disparate efforts to expand the work opportunity tax credit, a federal break for companies that employ veterans, ex-felons, and recipients of needs-based benefits. The introduction comes at the same time that business groups and other stakeholders are escalating their push for an expansion and extension of the credit.

“You win by adding,” said Sen. Bill Cassidy (R-La.), a tax writer sponsoring the legislation.

The joint legislative and lobbying effort could boost not just the renewal of a popular tax break that helps businesses offset training costs but a broader effort to help specific industries left out of Republicans’ massive tax law enacted in July.

The National Retail Federation flew in 20 tax executives from the grocery, retail, and restaurant sectors Tuesday to thank them for the broad business tax breaks in the July tax law and press for the narrower credit’s extension. They got an audience with Senate Majority Leader John Thune (R-S.D.), several House and Senate tax writers, and senior staff from the tax-writing panels.

“Now that those are extended, what wasn’t extended, WOTC, and we’d like to see that,” said Ashley Wilson, vice president of tax policy for the National Retail Federation. “It is helpful, especially now with the labor market being so tight.”

Cassidy and Rep. Lloyd Smucker (R-Pa.) are introducing legislation that would extend the credit for five years and index its benefits to inflation. The credit is currently set to expire at the end of the year.

The legislation, a copy of which was obtained by Bloomberg Tax, also incorporates enhancements previously proposed by Cassidy and Smucker that would increase the maximum credit, especially in cases when the employees work for at least 400 hours at the company.

The bill would encourage employers to bring on older workers by eliminating the age cap for when those on food assistance are eligible to count for the credit.

It also would expand eligibility to businesses that hire military spouses, incorporating a separate bill from Sens. John Boozman (R-Ark.) and Tim Kaine (D-Va.).

Lead supporters include Reps. Steven Horsford (D-Nev.), Don Beyer (D-Va.), and Mike Kelly (R-Pa.), chair of the House Ways and Means Committee’s tax subcommittee.

“We have more people on board now,” said Evan Migdail, a partner at DLA Piper lobbying for the tax credit’s extension. “You know how politics works: The more people you get supporting something, the better.”

Ramped Up Lobbying

When Republicans’ mega tax law was moving through Congress, some lobbyists for retail organizations had prioritized maintaining a low corporate rate and cementing a deduction for passthrough business over an extension of the employment tax credit, according to two industry sources familiar with their strategy.

But the potential end of the credit has motivated retailers to re-up their ask to lawmakers, especially now that the government has reopened.

Lawmakers and their private-sector allies hope a smattering of tax extensions can win enough bipartisan support in both chambers to reach President Donald Trump’s desk. Most discussions about the employment credit and other expiring provisions known as “tax extenders” were delayed due to the record-breaking government shutdown.

“There could be an opportunity here,” said Smucker, a senior tax writer, citing the multiple expiring breaks with bipartisan support.

Lawmakers in reopening the government set a Jan. 30 deadline to finalize funding for the rest of the fiscal year. Tax credits that expire at the end of the year could be renewed then without dramatic impact to businesses who would nonetheless face uncertainty for a few weeks.

“We’re going to do all we can to try and get it done by the end of the year,” said Misty Chally, executive director of the Critical Labor Coalition pushing for the credit’s extension. “If we can’t, we’ll try and get something passed retroactively.”

“Cursory” Talks So Far

A potential deal to address the looming termination of enhanced premium tax credits for Obamacare enrollees that precipitated the shutdown could also carry with it other expiring tax breaks, such as preservation the tax treatment of race tracks, two motorsports lobbyists said on condition of anonymity to discuss strategy.

House Ways and Means Committee Chair Jason Smith (R-Mo.) has discussed “some different bipartisan possibilities” in recent weeks with Rep. Richard Neal (D-Mass.), the panel’s ranking member.

He did not elaborate, and Neal said the talks were “cursory” so far.

Some of the expiring credits already have buy-in from the White House, which could help get votes necessary to clear Congress.

Film and TV studios, theaters, and sound recording studios’ ability to write off their expenses before their work premieres terminates at the end of the year. Lawmakers have enlisted actor Jon Voight, one of Trump’s “ambassadors to Hollywood” to press for that break’s renewal.

“We do have Trump’s ear on this issue of keeping film production here in the United States,” said Rep. Judy Chu (D-Calif.), a member of the Ways and Means Committee sponsoring legislation renewing the treatment.