Hamersma brief on work opportunity and Welfare-to-Work Tax Credits published in National Tax Journal

Nov 30, 2003

The Work Opportunity and Welfare-to-Work Tax Credits: Participation Rates Among Eligible Workers

Sarah Hamersma

National Tax Journal, November 2003

Sarah Hamersma

Public Administration & International Affairs Department

Center for Policy Research

Economic Policy

National Tax Journal

Sarah Hamersma

This paper examines participation in the Work Opportunity Tax Credit (WOTC) and the Welfare-to-Work Tax Credit (WtW), two federal employer subsidy programs. Hamersma uses nationally-representative data to estimate the number of disadvantaged workers whose employers qualified for either of the credits in 1997 or 1999. Hamersma compares these estimates to the number of applications approved in each year. Estimated participation in 1999 was less than 17 percent among eligible disadvantaged youth. While participation was higher for welfare recipients, even upper-bound esimates are less than 33 percent. These low participation rates are consistent with those of similar programs in previous years.