WASHINGTON As they lobby Congress for repeal of the credit union tax exemption, the bankers, predictably, have a different estimate of how much revenue a tax on credit unions would raise one of the keys being looked at by lawmakers as they weigh proposals for tax reform.
The American Bankers Association, which has been lobbying for repeal of the CU exemption for decades and is working to include the repeal in the tax reform package, is using a figure of almost $9.5 billion over five years, or almost $2 billion per year, provided by the Office of Management and Budget, the White House’s budget office, according to Keith Leggett, senior economist for the ABA, who follows credit unions for the trade group. The credit union lobby prefers the much lower estimate, $500 million per year, provided by the Joint Tax Committee of Congress.
Another figure that may find its way to Capitol Hill if the debate progresses this Congress is $3 billion the statutory 35% tax rate applied to the record $8.5 billion net income credit unions are projected to accrue in 2013. That figure is before write-offs and other legal tax avoidance schemes which are sure to whittle down tax revenue, but still significantly greater than the gain used by the credit union lobby. Despite the ongoing debate over tax reform, the ABA’s Leggett, who has been pushing for repeal of the exemption for years, is doubtful of its prospects. “If credit unions get taxed, it will be part of a broader reform of the tax code,” Leggett told Credit Union Journal yesterday. “But passing a tax reform in this Congress faces long odds.”
