January 13, 2015
In his first hearing as Ways and Means chairman today, Congressman Paul Ryan outlined major goals of the committee in 2015, among them business tax reform, trade agreements, dismantling Obamacare, and reforming poverty programs.
On working families and poverty he commented, “We’ve got to get people out of poverty, restore upward mobility, and move people from welfare to work—this will be a major undertaking of the committee in the days ahead.”
This gives WOTC supporters a clear opening. But remember, tax reform calls for ending programs like WOTC to pay for lower tax rates, so our case to retain WOTC must be strong as we are pushing uphill.
Here’s a preview of the thrust of our case: The core idea underpinning Chairman Ryan’s discussion draft on Expanding Opportunity In America which we forwarded recently is that any person who receives Federal aid must—except for the elderly and disabled—commit to work.
The goal of the social safety net is to put a floor under poverty income to mitigate deep poverty (via welfare, food stamps, Medicaid, etc) and help working poor families, who don’t earn enough to escape poverty, rise to the poverty level or above. So there are two groups of poor—those who are able to work but don’t have jobs, and those who are working but their earned income isn’t enough to get them out of poverty.
The single part of today’s social safety net that Congressman Ryan speaks approvingly of, and would expand, is the Earned Income Tax Credit, first put forward by Milton Friedman and passed under President Reagan. People with earned income—the working poor—are eligible for EITC which is a refundable credit that adds extra dollars to a poor family’s income.
WOTC is key to helping the non-working poor escape poverty by finding jobs which provide a basic income; then, if their earnings aren’t enough to escape poverty, they become eligible for EITC. In this concept, WOTC works in tandem with Ryan’s expanded EITC that makes single workers eligible along with married workers—WOTC becomes a core part of the social safety net, and if Chairman Ryan adopts this concept he’s bound to look at expanding WOTC via the several ways indicated in our last report.