Obama Deficit Reduction Proposals Could Include Removal of CU Tax Exemption
When President Obama unveils his deficit-reduction package Wednesday, the credit union tax exemption could be in the mix.
Several media reports have said that Obama will draw on several sources of ideas, including his own deficit-reduction commission which mentioned eliminating tax expenditures, when drawing up the recommendations he plans to unveil at a speech at George Washington University in Washington, D.C.
The commission’s report doesn't mention the credit union tax exemption by name but the report released describes these expenditures as "another name for spending through the tax code.''
President Obama's Economic Recovery Board raised the possibility in a report issued last summer on ways to simplify the tax system and raise revenue.
"Unlike other financial institutions like banks and thrifts, credit unions do not pay corporate taxes on their income," the report notes. "Eliminating this exemption would raise revenue and level the playing field but would clearly raise taxes on credit unions."
When the Treasury Department did an analysis in 2005, it estimated the annual revenue at $1.39 billion, while Congress's 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.