Ways and Means working group tax reform report—CUNA News Now, May 7
A 550-plus page report on tax policy reform, created by 11 House Ways and Means working groups and delivered to the Joint Committee on Taxation on May 6, mentions the credit union tax exemption, as expected.
The report states, "Credit unions are exempt from federal income taxation. The exemption is based on their status as not-for-profit mutual or cooperative organizations (without capital stock) operated for the benefit of their members, who generally must share a common bond."
The report also notes that the definition of common bond has been expanded so more people can access credit unions.
It continues: "While significant differences between the rules under which credit unions and banks operate have existed in the past, most of those differences have disappeared over time."
This final sentence on credit unions in the report comes directly from a study from the last years of the Clinton administration.
Upon release of the working groups' report, Credit Union National Association (CUNA) President/CEO Bill Cheney emphasized that preserving the credit union tax exemption is CUNA's highest priority.
"However," he added, "the most effective way that we can do that is to ensure that our members and supporters, nationwide, understand the value that credit unions bring to their memberships and consumers at large and how the tax exemption plays a critical role for not-for-profit credit unions.
"We cannot take anything for granted--we urge credit unions to take action and tell the story to their members.
Ways and Means Committee Chair Dave Camp (R-MI) and Ranking Member Sander Levin (D-MI) called the report an "important and comprehensive overview of the tax code, an overview of some of the most commonly referenced previous tax reform proposals and summarizes the views of more than 1,300 submissions offered to the Ways and Means Committee by key stakeholders."
They pledged that the committee will "dig into its details over the coming weeks."
The Ways and Means working groups accepted public comment until April 15, and prior to that deadline CUNA participated in a committee briefing on the credit union tax status, talking to four members of the powerful tax-policy committee and about 15 staffers, and also submitted a comment letter.
Among the points emphasized by CUNA about the tax exemption:
- The economic benefits provide gains to tax-paying credit union members and other consumers that far outweigh any funds that would be brought in by imposing a federal income tax on credit unions;
- While the Joint Committee on Taxation estimated the credit union "tax expenditure" meant $0.5 billion in unclaimed government revenues in 2012, CUNA estimates that credit unions gave $8 billion back to their members and other consumers in the form of low fees, low rates, and other benefits;
- A tax on credit unions is a tax on 96 million Americans who are their members.
Further, CUNA pointed out, credit unions provide full and fair service to all members and more than half of members that rely on credit unions for their primary financial services are middle class Americans, bringing in annual incomes of $25,000 to $75,000.