Committee's Direction On Non-Profits Unclear

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It's not clear what direction the tax-writing House Ways and Means Committee is headed after its recent hearing on 501 (c) tax-exempt organizations; Committee Chairman Bill Thomas of California, admitted as much when asked by The Credit Union Journal.

Thomas insisted the hearings represented the committee's responsibility for oversight, or review, of an important issue, and he is undecided whether to pursue any of its findings through legislation, so far.

But even if the independent-minded Thomas were to go after the tax exemption of some of the groups he has targeted-especially the not-for-profit hospitals and health care companies-such an ambitious political gambit is fraught with all kinds of dangers and usually takes years to undertake. The dangers are that Thomas, and by extension the Republicans who control Congress, would be alienating another powerful group (tax-exempt organizations), after taking on the senior citizens in the current debate over Social Security reform.

But just as important is that Thomas' six-year term limit as chairman of the committee, as set by the GOP, is due to expire at the end of the current, 109th Congress. Considering that election season generally starts six months before the actual elections-and that's when serious lawmaking usually ceases-that leaves Thomas and the committee about a year to tackle this complicated and controversial issue, that is, whether the 1.6-million tax-exempt organizations, including credit unions, continue to deserve their free ride from federal income taxes.

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