Will Congress Rescind The Tax Exemption?
We have all seen how effective Congress has been lately and it does not appear there is any change going to happen anytime soon. Comprehensive tax reform would mean putting all tax exemptions on the table. There are too many concerns about losing votes and control of each respective chamber for that to happen. If when dealing with sequestration and the debt ceiling, Congress could look to cover the costs of their resolution. Big ticket tax expenditures with broad, deep and vocal constituencies may survive, and Congress may look then at smaller ticket items, like credit union tax status.
Credit unions would undoubtedly be able to mount a meaningful grassroots response to such a threat. The value of maintaining credit unions' state tax exempt status has been reaffirmed at the presidential, congressional and state legislative level since the Great Depression. That value is more apparent now than ever. NAFCU commissioned a study in the summer of 2012 to look at the federal credit union tax exemption. Action to remove credit union tax exemption can only occur if they can justify reducing U.S. GDP by about $148 billion (in 2010 dollars) over the next decade. It is incumbent upon our industry's leadership, veteran and energetic, to educate, strengthen and uphold the trust these members have in the credit union industry.