Washington, D.C. – U.S. Rep. Lloyd Smucker (PA-16) today introduced legislation to address the urgent need to ensure current and future workers are prepared for jobs in today’s 21st century economy.

The USA Workforce Tax Credit Act would establish a new federal tax credit that will encourage charitable donations for community-based apprenticeship programs, career and technical education, workforce development, and educational preparedness.

“One of the best ways to lift people up and provide more opportunity is to connect them with good-paying, family-sustaining jobs,” said Rep. Smucker. “When I was operating a small construction company, I saw the skills gap firsthand. There were times when we couldn’t expand our business and create more jobs because workers were simply unavailable. The goal of this legislation is to encourage investment in organizations and programs that are preparing individuals for the jobs of today.”

Today there are more than 4.5 million jobs available, including 400,000 in the manufacturing sector. The tax credit would be capped at $2 billion annually, beginning in tax year 2018.

BACKGROUND

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Credit Against Income and Corporate Taxes: This bill would amend the Internal Revenue Code to allow individual taxpayers a tax credit to charitable contributions to non-profit organizations that exclusively provide workforce development, apprenticeship training, or K-12 scholarships. The bill allows a maximum credit amount equal to or less than 25 percent of an individual taxpayer’s total liability, or $250,000; and for corporate taxpayers the lesser of 25 percent of the tax liability or $250,000.

Eligible Students or Participants: An eligible participant is an individual enrolled in a workforce development or apprenticeship program. A student is eligible to receive a scholarship from a non-profit scholarship-granting organization if they are enrolled in an elementary or secondary school and reside in a household with a total annual income that does not exceed 200 percent of the median gross income.

This measure reflects the wide variance in middle-class incomes throughout the country. In 2017, for example, a student residing in Brooklyn, New York could be in a household with up to $132,400 in total annual income. A student in Minneapolis, Minnesota would qualify in a household with up to $180,800 in total annual income. A student in Pittsburgh, Pennsylvania would qualify in a household with up to $145,200 in total annual income.

Eligible Entities: Eligible entities that can receive tax-credited contributions must be 501(c)(3) tax-exempt entities that provide, at a minimum, workforce development, apprenticeship training, or K-12 scholarship assistance. Such entities would include, but are not limited to, community colleges, workforce training programs as defined by state workforce agencies, organizations that provide career and technical education, training institutes, private schools that confer diplomas, degrees, or certify completion of certain grades, community organizations that provide certified training, and organizations that provide K-12 scholarships to more than one student and offer more than one school.

Eligible entities must obtain annual financial and compliance audits from an independently-certified public accountant which must be submitted to the Secretary of the Treasury. The bill would also impose a penalty on organizations that provide workforce development or apprenticeship training that fail to distribute at least 90 percent of their total receipts for elementary and secondary school expenses in a taxable year.

Eligible K-12 Schools: Schools may enroll scholarship students under this program if they charge tuition, comply with all applicable state laws relating to unlawful discrimination, health, safety, and criminal background checks. Schools must also agree to provide reports to parents on their student’s academic achievement.