Redesigning Post-Incarceration Employment Tax Credits: Making Work Opportunity Credits Work for Former Felons

Former felons have a significantly higher unemployment rate than other groups of American workers. This unemployment increases recidivism as well as broader societal problems. Consequently, Congress enacted the Work Opportunity Tax Credit to encourage employers to hire former felons (and other groups of targeted workers) by offsetting their wages. For the credit to increase employment, employers must know whether potential workers would likely qualify for the credit before hiring decisions are made.

However, the growing Ban the Box Movement seeks to defer or eliminate conviction history questions in hiring. After examining the credit’s stated purpose, its operating mechanism, and some of the reasons for its failures, this Article proposes three tranches of changes that would create a more effective tax incentive and pair well with the Ban the Box Movement. These changes range from incremental ones to those that would make significant progress in integrating former felons into society and the labor market.