Overview
Title
To amend the Internal Revenue Code of 1986 to allow employers a credit against income tax for employees who participate in qualified apprenticeship programs.
ELI5 AI
This bill wants to give companies money back on their taxes if they hire and train workers in special training programs called apprenticeships, except for some construction jobs unless they follow certain rules. It also aims to save money by putting more government papers online instead of printing them.
Summary AI
H. R. 1662, also known as the "Leveraging and Energizing America's Apprenticeship Programs Act" or the "LEAP Act," proposes changes to the Internal Revenue Code to provide tax credits to employers who have employees participating in recognized apprenticeship programs. For each apprentice employee who exceeds a baseline number, employers can receive a $1,500 tax credit for up to two years. However, this credit is not available to the construction industry unless the employee is a pre-apprenticeship graduate and the employer sponsors an apprenticeship program. Additionally, the bill mandates the reduction of government printing costs by making more publications available online.
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AnalysisAI
General Summary of the Bill
The proposed legislation, titled the "Leveraging and Energizing America’s Apprenticeship Programs Act" or the "LEAP Act," seeks to amend the Internal Revenue Code of 1986. It aims to allow employers a tax credit for participating in qualified apprenticeship programs. Specifically, employers could be eligible for a $1,500 tax credit for each apprentice they hire beyond a set baseline number, applicable for up to two years per apprentice. The bill also mandates a strategy to reduce government printing costs, balancing between moving publications online and ensuring access for those with limited internet.
Summary of Significant Issues
One of the key issues with the bill is its reliance on existing definitions and structures within the Internal Revenue Code, which can be complex and may require additional cross-referencing. This potentially hinders the bill’s straightforward application. Moreover, certain industries are excluded unless specific conditions are met, potentially disadvantaging sectors like construction. Calculating the credit eligibility involves a complex formula, presenting challenges for small businesses without advanced resources or tax expertise.
Furthermore, the lack of inflationary adjustment for the $1,500 credit could diminish its value over time. The bill's requirement for pre-apprenticeship programs to establish documented partnerships could create administrative burdens and discourage new program development. In reducing government printing costs, the bill lacks clear metrics for success and definitions of what essential printed documents entail, possibly leading to inconsistent application across agencies.
Impact on the Public Broadly
The LEAP Act could broadly encourage the growth of apprenticeship programs, facilitating vocational training and workforce development. However, the complexity involved in claiming the tax credit might limit its accessibility, particularly for smaller businesses that potentially benefit from such incentives. The move to digitize government publications could improve efficiency and support environmental initiatives, though it risks marginalizing individuals and communities with limited internet access.
Impact on Specific Stakeholders
Employers: Large companies with existing apprenticeship infrastructures may find the bill advantageous, allowing them to expand their programs with government support. Small businesses, however, may face hurdles due to the complexity of the credit claiming process and the potential administrative burden of meeting program eligibility requirements.
Apprentices and Workers: Those seeking apprenticeships might see increased opportunities as employers are incentivized to hire apprentices. However, those in industries with stringent eligibility requirements may find fewer opportunities if employers in those sectors are discouraged from forming new programs.
Government Agencies: Agencies are tasked with reducing printing costs while ensuring equitable access to information. This requires a careful balance that could lead to additional responsibilities and oversight in ensuring compliance with the bill's mandates.
Rural and Low-Internet Communities: Individuals in areas with limited internet may face access challenges if government documents transition primarily to online formats. Ensuring that critical information remains accessible to these groups is essential for the policy to be genuinely inclusive.
Overall, while the LEAP Act has the potential to vastly enhance apprenticeship opportunities and support business participation, its complexities and exclusions may limit its effectiveness and equity across the board.
Financial Assessment
The "Leveraging and Energizing America’s Apprenticeship Programs Act," or the "LEAP Act," introduces a financial incentive designed to support employers who engage in recognized apprenticeship programs. This bill amends the Internal Revenue Code to award a tax credit to such employers, which may have significant implications for both businesses and the federal tax framework.
Tax Credit Provisions
Under the LEAP Act, employers can receive a tax credit of $1,500 for each apprenticeship employee exceeding a predetermined baseline number each year. However, this credit applies for only up to two years for any single apprenticeship employee. This financial incentive is targeted at encouraging businesses to increase the number of apprentices they employ, thereby promoting skills development and workforce expansion.
Industry Exclusions and Requirements
The bill specifically excludes employers in the construction industry from claiming this credit unless certain criteria are met. To qualify, construction employers must ensure their employees are pre-apprenticeship graduates enrolled in an apprenticeship program, and the employer must participate in or sponsor such a program. This condition potentially disadvantages sectors without established pathways, which could limit participation. The exclusion based on the North American Industry Classification System (NAICS) code beginning with 23 underscores a deliberate focus on ensuring only structured and formalized training pathways receive financial support.
Calculation Complexities
The credit's applicability is determined against an "applicable apprenticeship level," defined as 80% of the average number of apprenticeship employees over the past three years. Small businesses might find calculating this level challenging due to resource constraints, labeling a potential hurdle for claiming the credit effectively. Moreover, new employers without prior apprenticeship employees have an applicable level of zero for their first year, which simplifies initial credit claims but might require sophisticated tracking in subsequent years to determine eligibility.
Coordination with Other Credits
The LEAP Act includes provisions affecting the coordination of this tax credit with other existing credits. The amount of credit available under sections 45A, 51(a), and 1396(a) shall be reduced by the value of the apprenticeship credit granted. This coordination aims to prevent a double benefit but might introduce complexity, especially for smaller businesses that lack the accounting acumen to navigate overlapping incentives.
Long-Term Considerations
There is no provision for adjusting the $1,500 credit amount for inflation. Over time, the real-world value of this incentive might diminish, potentially reducing its attractiveness to employers and thus its effectiveness in promoting apprenticeship programs. This gap could lessen the impetus for businesses to maintain or increase apprenticeship offerings as operational costs rise.
Government Printing Costs
Beyond apprenticeship incentives, the bill addresses government expenditures related to printing costs by proposing increased reliance on digital publication formats. While this section outlines strategies to reduce fiscal spending, it lacks detailed definitions for what constitutes "essential printed documents," which could lead to inconsistent implementation across federal departments and agencies.
In summary, while the LEAP Act financially supports the expansion of apprenticeship programs, its practical impact may be tempered by industry-specific exclusions, calculation requirements, and lack of inflation adjustments. These financial allocations, unless accompanied by comprehensive guidance and support mechanisms, might not fully realize their intended economic and social benefits.
Issues
The definition of 'apprenticeship employee' and 'apprenticeship program' in Section 2 relies on other sections of the Code, which may require additional cross-referencing for clarity and might impede the bill's implementation.
The eligibility criteria and exclusion for certain industries in Section 2, based on participation in pre-apprenticeship programs, may disadvantage sectors that lack established pathways, potentially affecting the construction sector particularly, according to NAICS code 23.
The complexity of calculating the 'applicable apprenticeship level' in Section 2 might pose a challenge for small businesses lacking resources, affecting their ability to claim credits effectively.
Section 2 introduces potential bureaucratic hurdles for smaller or newer programs due to the requirement for 'pre-apprenticeship programs' to have 'documented partnerships' with apprenticeship sponsors, possibly discouraging new entrants.
In Section 2, the lack of consideration for inflationary adjustments to the $1,500 credit amount might reduce its real-world impact over time, potentially diminishing the incentive for employers.
Section 3 lacks clear definition and accountability mechanisms concerning what constitutes 'essential printed documents,' which could lead to varied interpretations and misuse, affecting efforts to reduce governmental printing costs efficiently.
The coordination with other credits in Section 2 might complicate decision-making for employers, leading to possible overlapping credit reductions and decreased overall incentives, which could particularly disadvantage small businesses.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the Act states its official title, which is the “Leveraging and Energizing America’s Apprenticeship Programs Act” or simply the “LEAP Act”.
2. Credit for employees participating in qualified apprenticeship programs Read Opens in new tab
Summary AI
In this section, employers can receive a tax credit of $1,500 for each apprentice they hire above a certain number, and this credit can be claimed for up to two years per apprentice. This benefit does not apply to some industries unless specific conditions are met, and it cannot be combined with other similar credits for the same employee.
Money References
- “(a) In general.—For purposes of section 38, the apprenticeship credit determined under this section for the taxable year is an amount equal to $1,500 for each of the apprenticeship employees of the employer that exceeds the applicable apprenticeship level (as determined under subsection (d)) during such taxable year.
45BB. Employees participating in qualified apprenticeship programs Read Opens in new tab
Summary AI
Employers can receive a tax credit of $1,500 for each additional apprenticeship employee they hire over a certain baseline number, but this applies only for up to two years per employee. To qualify, employees must be part of a registered apprenticeship program, and certain rules and limitations apply, such as exclusions for specific industries and coordination with other tax credits.
Money References
- (a) In general.—For purposes of section 38, the apprenticeship credit determined under this section for the taxable year is an amount equal to $1,500 for each of the apprenticeship employees of the employer that exceeds the applicable apprenticeship level (as determined under subsection (d)) during such taxable year.
3. Limitation on government printing costs Read Opens in new tab
Summary AI
The section requires the Office of Management and Budget to work with government departments and agencies to identify publications that can be posted online instead of printed, establish guidelines to reduce printing costs, and ensure essential documents stay available for people with limited internet access. It also mandates that printed government publications clearly list the issuing body, number of copies, total printing cost, and the publisher's name.