NAFCU Withdraws From DLC Following Tax Proposal

Register now

NAFCU has withdrawn its membership in the Democratic Leadership Council.

The move follows a proposal by the Progressive Policy Institute, which is closely aligned with the Democratic party, that the tax exemption for credit unions of $10 million or more in assets be revoked.

NAFCU Senior Vice President, Bill Donovan, Director of Political Affairs Murray Chanow and Director of Research Tun Wai met with PPI President Will Marshall and Paul Weinstein to discuss the negative consequences of taxing credit unions and to request that PPI consider a retraction or explanation in the "Editor's Note" column in its Blueprint magazine. According to NAFCU, "PPI was not disposed to grant such a request."

In a letter to DLC CEO Fred From, NAFCU President Fred Becker said, "It is readily apparent from the article that the nature and work of credit unions is not well understood."

After providing an explanation of credit union structure, Becker went on to say, "The article also fails to recognize that if federal income taxes were imposed on credit unions, hardships would be created as credit unions strive to retain adequate capital to protect their members' share deposits. Federal laws prohibit all credit unions from accessing the open capital markets ... Taxation, along with capital acquisition restrictions, would place credit unions at a clear and serious disadvantage with other financial services providers."

Becker told from that if taxed, credit unions could only be expected to utilize the same tax avoidance measures currently exercised by banks, effectively cutting the $15.2 billion in estimated taxes by up to 50%.

For reprint and licensing requests for this article, click here.