WASHINGTON — Lawmakers from both sides of the political aisle voiced their support Wednesday for keeping credit unions' federal tax exemption intact even as the Trump administration and Congress prepare to make sweeping changes to the tax code.
Speaking before the Credit Union National Association's government affairs conference, lawmakers were unequivocal on the issue.
“America’s credit unions enjoy strong bipartisan support,” Rep. Linda Sanchez, D-Calif., told credit union executives.
Sanchez is a member of House Ways and Means Committee, which is responsible for writing tax policy and will be central to Trump’s tax reform plan. While Sanchez said an overhaul of the tax code is overdue, her “priority is a tax code that provides economic certainty for working families," she said. "Preserving the current tax exempt status for credit unions is a key part to providing that certainty.”
Rep. Brad Sherman, D-Calif., a former accountant who is on the House Financial Services Committee, said bankers who claim that the tax-exempt status is a loophole are off base.
“I know what a loophole is," Sherman said. "That used to be my job. A loophole is when a crafty tax lawyer finds some provision that can be used in a way that Congress never intended. I think Congress is aware credit unions are tax exempt."
On the Republican side, Rep. Ed Royce of California, another member of the House Financial Services panel, said the credit union executives who were on their annual retreat to Washington to visit with lawmakers need to convey the unique value that credit unions bring to their communities.
“People like their banks, but they love their credit unions … because they realize the impact that its having on the local economy,” Royce said. “We can teach [lawmakers] about your not-for-profit model and why it should not be taxed, ever, period.”
Sherman noted that credit unions can easily distinguish themselves from the largest financial institutions.
“This is the largest group of financial institution executives where not a single institution is 'too big to fail' and not a single institution took a single penny of bailout money under [the Troubled Asset Relief Program] and … as we saw with Wells Fargo, not a single institution here is too big to manage," he said.
