WASHINGTON – Top credit union lobbyists will ask Congress this morning to think twice before vastly expanding the number of tax-exempt Subchapter S banks by studying the effects of the new tax breaks on consumers and the U.S. budget deficit.
CUNA President Bill Cheney, testifying on a regulatory relief bill for banks called The Communities First Act, will urge Congress to closely review who will benefit from the additional breaks the bankers are seeking for the 2,358 tax-exempt Subchapter S banks, especially in light of the bankers’ regular drumbeat opposing the credit union tax exemption.
According to an advance copy of his testimony, Cheney will ask Congress to determine whether the banks’ promises that lower taxes will result in more benefits to consumers are true. “Where is their evidence that additional tax advantages to banks would result in lower fees, lower rates or better service for consumers?” he will ask.
NAFCU President Fred Becker, who is also appearing before the House Financial Services Committee, will point out the tax exemption for banks is estimated to cost the U.S. Treasury $2.05 billion in lost tax revenue a year—significantly greater than the $1.3 billion value of the credit union exemption.
The bank-backed bill would double the number of shareholders a bank could have to qualify for the tax exemption. Cheney, while insisting CUNA does not oppose the proposal, will tell lawmakers that CUNA’s analysis shows that Subchapter S banks charge higher consumer fees and are three times as profitable as non-exempt banks.
Becker told the Credit Union Journal yesterday he will steer clear of opposing the bankers’ bill, but wants Congress to give credit unions equal consideration, especially when it comes to the bankers’ claims about the credit union tax exemption.
Both credit union lobbyists will ask lawmakers to expand the bank bill to include several provisions relieving regulations for credit unions.
