A draft proposal of a report by a presidentially appointed deficit reduction panel includes an option that would eliminate many tax exemptions, including the one for credit unions.
The report doesn't cite credit unions by name but suggests eliminating "all $1.1 trillion in tax expenditures.''
It does, however, cite other tax deductions that should be eliminated, including one for mortgage interest.
When the Treasury Department did an analysis in 2005, it estimated the annual revenue from taxing credit unions to be $1.39 billion while Congress' Joint Committee on Taxation estimated $1.30 billion. The Tax Foundation, in a study funded by the Independent Community Bankers of America, concluded during that same year that that the annual revenues from such a tax could be as high as $3 billion.
The proposal, which is still being debated among the 18-member commission, combines tax increases and spending reductions that it estimates would cut $4 trillion in projected deficits by 2020.
If 14 of the panel's members approve the recommendation it would be sent to Congress, which could vote it up or down but not make modifications. The final report is scheduled to be released on Dec. 1.
The draft proposal suggests that eliminating the tax credits could be done at the same time as simplifying the tax rate system. One proposal would result in income tax rates ranging from 8% to 23%; currently the range is 10%-35%.
