Bank Trade Groups Press For New Tax Exemptions

Three bank and thrift trade groups are pressing President Bush and his economic advisors for a special tax exemption for interest and dividends.

The groups want the tax exemption included in the legislative package currently being prepared by the administration. The letter, signed by the American Bankers Association, America's Community Bankers and the Independent Community Bankers of America, asks for an individual exemption for both interest and dividends received.

"Unless an interest exemption is included, an unfair tax bias will be created against traditional deposit instruments and fixed-income investments," the letter states. The trade groups argued that failure to include an interest and dividend exemption in the administration's expected tax relief package could hurt community bankers the most, by removing one of the incentives for consumers to hold funds in interest-bearing bank accounts.