An Evaluation of Tax Incentives for On-the-Job Training of the Disadvantaged
Volume: Volume 2, No. 1
Issue: Spring 1971
Pages: pp. 293-327
Authors: Daniel M. Holland
Title: An Evaluation of Tax Incentives for On-the-Job Training of the Disadvantaged
Abstract:
Training on the job, an important element in the formation of human capital, is
a particularly promising objective of government policy for the disadvantaged
who, because they require a variety of special services and arrangements, are
costly to employ initially. Presently, under the NAB-JOBS program, the Federal
Government meets the additional expenses of companies that contract to place
disadvantaged workers in specified job-training slots. In the last several
years, a number of students and legislators, concerned with the urgency and
magnitude of the problem of poverty and alleged deficiencies of the present
subsidy, analogize from the Investment Tax Credit, have urged that tax
incentives be provided for on-the-job training of the disadvantaged.
This article evaluates their proposal on grounds of "general principles" and
with reference to "practical" features of the particular objective that the
incentive is designed to further. The author concludes that a direct
expenditure program is to be preferred on both counts. However, this is no
warrant for complacency with the current direct expenditure on-the-job training
program. It needs improvements in design and enhanced scope, as well as a
tighter labor market than we have experienced in the last several years, to
make the incentive it offers meaningful to employers.