To the Ramparts on Tax Exemption
Let there be no doubt that credit unions’ federal tax exemption is something our industry is going to have to fight for in order to keep.
Consider what happened in Washington on Nov. 14. Rep. Dennis Ross (R-Fla.), a lawmaker who had previously backed several credit union-friendly bills, included language to a deficit reduction and tax reform bill that called for the credit union federal tax exemption to be phased out over a five-year period from 2013 through 2017. The exemption was one of 29 federal tax expenditures targeted for elimination.
In addition, it’s important to remember that the exemption enables credit unions to provide some much-needed balance to the financial services marketplace. It’s no secret that banks aren’t lending enough, particularly to small businesses. Thankfully, credit unions are filling the vacuum, providing an essential counterweight to the indifference of the for-profit banks.
A 2011 study commissioned by the SBA’s Office of Advocacy found that credit unions have the ability to offset declines in bank business lending during a recession. The same study also found that bank lending was largely unaffected by changes in credit unions’ business lending–a point our industry continues to drive home with lawmakers as we seek to build support for legislation that would expand credit unions’ ability to make loans to their small business member-owners.