Eliminating the federal tax exemption for credit unions isincluded in H.R. 6474, the House bill that contains the sevenimmediate reforms recommended by the National Commission on FiscalResponsibility and Reform.

While the possibility has been regularly raised on Capitol Hill,this is the first time since the Reagan years that the credit unionexemption has been specifically put on the table in a piece oflegislation, observers said.

• Later Wednesday Congressman Says Tax Exemption Cut Added inError

Also known commonly as the Simpson-Bowles commission, thebi-partisan panel was created by President Obama in 2010 to studyand propose ways to improve the nation's fiscal health.

In this case, among a list of exemptions to be eliminated, H.R.6474 states that it would eliminate in five equal steps over fiveyears beginning in the 2013 tax year the following:

“(9) Section 501(c)(14) of such Code (relating to credit unionswithout capital stock organized and operated for mutual purposesand without profit) and section 122 of the Federal Credit UnionAct.”

The bill was introduced Sept. 20 by U.S. Rep. Dennis Ross(R-Fla.) and declares as its purpose: “To adopt the seven immediatereforms recommended by the National Commission on FiscalResponsibility and Reform to reduce spending and make the FederalGovernment more efficient.”

Nate Muniz, public and government relations specialist with the$4 billion Pennsylvania State Employees Credit Union, said despitethe introduction date, its details are just now being published. Healso said he's not surprised eliminating the tax exemption has nowbeen legislatively proposed, but that he also does not think itwill easily pass.

“I think we felt it was going to come sooner or a later. It wasjust a matter of time,” he said Wednesday afternoon. “But it's partof a long list of exemptions, all of which have competinginterests. I just wish it would have waited until next year, giventhe climate we're in now.”

Some of the other specific exemptions included in the measureinclude those for citizens living abroad, gross income of insurancecontracts, interest on qualified veterans' mortgage bonds, merchantmarine capital construction, film and television productions andcoal production.

A companion Senate measure does not contain the credit unionexemption specifically, Muniz said he has been told.

The House bill was referred to the Committee on Ways and Means,the House document said, “in addition to the Committees onOversight and Government Reform, House Administration, Rules, andthe Budget, for a period to be subsequently determined by theSpeaker, in each case for consideration of such provisions as fallwithin the jurisdiction of the committee concerned.”

The full text of the bill is available online.