Tax Report a Mixed Bag for CU Exemption
The long-awaited working group report to the House Ways and Means Committee on tax reform, released Monday, is a mixed bag for credit unions.
On the one hand, the report from the Working Group on Charitable/Exempt Organizations summarized the input it received to be overall in favor of retaining the credit union tax exemption.
And, the Working Group on Financial Services reported submissions it received suggest Congress should retain the tax-exempt status for credit unions. However, a list of groups submitting comments for the report did not include the Independent Community Bankers of America or the American Bankers Association.
On the downer side, the report included recommendations to eliminate the credit union tax exemption from a May 2011 report from liberal think tank Center for American Progress and the President’s Economic Recovery Advisory Board report of 2010, which also advocated for the elimination of the credit union tax exemption, was also included.
In a section that describes current tax law under scrutiny, the report also made an ominous statement about the credit union exemption, saying “while significant differences between the rules under which credit unions and banks operate have existed in the past, most of those differences have disappeared over time.”
Ways and Means Committee Chairman Dave Camp (R-Mich.) and Ranking Member Sander Levin (D-Mich.) said in a joint statement, “This document provides an important and comprehensive overview of the tax code, an overview of some of the most commonly referenced previous tax reform proposals and summarizes the views of more than 1,300 submissions offered to the Ways and Means Committee by key stakeholders. The committee will dig into its details over the coming weeks.”
CUNA Executive Vice President of Governmental Affairs Ryan Donovan said upon first review, the report doesn’t appear to shed a lot of light as to what could be included in tax reform legislation.
However, Donovan said he’s heard from staffers in the Senate and the House that Congress may use tax reform as a bargaining chip in another debt ceiling increase that has to be hammered out by September. Republicans oppose an increase, but are pushing for tax reform.
“It’s a political move, no doubt, but it gives them a bit of leverage in the process,” he said.
Donovan said House Ways and Means Committee leadership has spoken out on record saying they want to pass a tax reform bill in the House by the end of July, which he said coincides with the timing the House would begin debt ceiling debate.
“They might even start later this month,” he said.