Banks Criticized For 'Hypocrisy' After Vote
The Senate has approved a bill that expands subchapter S provisions used by banks to cut their tax liabilities.
The legislation was included as part of the broader corporate tax legislation. The bill would increase the maximum number of shareholders by a third, to 100, and allow up to three generations of family members to be counted as one shareholder. It also would lift current rules that prohibit banks from converting to S corporations if any of their shares are held in individual retirement accounts.
Under the subchapter S rules, an S corporation is taxed in a manner that is similar to the taxation of a partnership. That is, earnings are not taxed at the corporate level-an S corporation does not pay an entity level tax-but are passed through and taxed to the shareholders, whether or not the earnings are distributed.
CUNA's Gary Kohn, VP-legislative affairs and senior legislative counsel, issued a statement saying, "The Credit Union National Association does not object to the Subchapter S bank provisions or efforts to reduce taxes for bankers. However, we are compelled by recent events to point out the banking trade associations' hypocrisy. It is incredulous that on the one hand they ask for more tax breaks for themselves, and on the other they ask Congress to pay for it by taxing 86 million Americans that are credit union members."