WASHINGTON-A 550-page report on tax policy that was released by the House Ways and Means Committee and its Joint Committee on Taxation last week includes mention of the credit union tax exemption.
The report states that what it calls the "tax expenditure" represented by the CU tax exemption results in "unclaimed government revenues" of approximately $500 million in 2012. Both CUNA and NAFCU issued statements in response saying the financial benefits credit unions provide consumers are many-fold greater than any revenues a tax on credit unions would provide.
While not calling for the tax exemption to be revoked, the study does state "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."
Earlier in the report it points out that changes have been made to common bond in order to allow more people to join credit unions and provides a background explanation of the CU tax exemption that notes "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."
In response, both credit union trade associations stated that the tax exemption remains their primary focus.
"Protecting the credit union federal income tax exemption is job #1 at NAFCU," said CEO Fred Becker. "As corporate tax reform discussions continue, we look forward to an ongoing dialogue with the Joint Committee on Taxation, the House Ways and Means Committee and others to make sure the value of credit unions' federal income tax exemption is not forgotten. Credit unions must be allowed to continue playing their important role in the marketplace-and the tax exemption not only helps them serve nearly 95 million member-owners, but also benefits all consumers and the economy as a whole."
Understanding The 'Value'
Prior to release of the report NAFCU met with a number of members of Congress who were members of the Financial Services Working Group where NAFCU reps shared an independent study suggesting the tax exemption brings $10 billion in benefits annually to consumers.
CUNA also stated its highest priority is to protect the tax exemption, with CEO Bill Cheney stating, "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."
CUNA has also published a study suggesting credit unions provide $8 billion annually in lower rates, lower fees and other benefits to consumers.
