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WASHINGTON – Lawmakers have been busy lately writing letters and statements in support of credit unions’ tax exemption. Just recently, even House Majority Leader Tom DeLay (R-Texas) sat down to do an interview with a CUNA publication to express his support of the tax-exempt status, in addition to member business lending and regulatory relief legislation. Credit unions have also obtained letters from President George W. Bush and Democratic Presidential Candidate Senator John Kerry (D-Mass.) that they will protect credit unions’ tax exemption. In the meantime, the bankers are still working to grow support for their side of the argument. Thus far, Federal Deposit Insurance Corporation Chairman Donald Powell, a former community banker himself has come out in favor of taxing credit unions. Additionally, House Ways and Means Committee Chairman Bill Thomas (R-Calif.) has said he is interested in possibly holding a hearing on the subject. One of the most recent public officials to jump on credit unions’ tax exemption bandwagon is Congressman John Culberson (R-Texas). In a June 21 letter to Texas Credit Union League President and CEO Dick Ensweiler, the lawmaker noted, “Throughout my fourteen years in the Texas State House and my two terms in Congress, I have always maintained a very supportive and cooperative relationship with the Texas Credit Union League.” He also displayed his knowledge of credit unions. “Credit unions were designed to be depository institutions, run by their members for the benefit of their members. As a tax-exempt organization, credit unions are tailored to meet the financial needs of their members. I strongly support the efforts of our credit unions, and will continue to work to keep credit unions exempt from federal income taxes.” Here’s a look at CU supporters of the tax exemption. [email protected] President George W. Bush took time out from running the country and campaigning to make public record of his support of credit unions’ tax exemption. In letters to CUNA and NAFCU, he wrote, “My Administration’s pro-growth policies have spurred strength and vitality in our economy, and America’s credit unions have played an important role in that success. By increasing lending opportunities to small businesses, families, and workers, credit unions are contributing to our economic recovery and increasing opportunities in our communities. “I support strongly the tax-exempt status of credit unions, and will continue to highlight the important contributions that credit unions make to our financial system. As service-oriented, member-owned financial cooperatives, credit unions should continue to invest in a safe and sound manner in America’s future.” “I am writing to express my support of the important work being done by America’s credit unions. Today, credit unions help working families that do not have easy access to credit pool their savings to make loans available at competitive interest rates. This provides new opportunities in low- and moderate-income communities and has helped countless members avoid predatory loan practices from unscrupulous lenders. Additionally, credit unions have led in the effort to increase the financial literacy of their members and through credit union branches in schools across America. “Credit unions’ focus on member service means that your organization is constantly evolving to expand and enhance products and services for your members. While you continue this important work, I want you to know that I will continue to support America’s credit unions and oppose any efforts to change the existing tax-exempt status of credit unions.” In February, on the stage of CUNA’s Governmental Affairs Conference, Treasury Secretary John Snow said he understands that credit unions are there to serve their members. “Let me say to you: I understand you are for service and not for profit. Which is the fundamental reason why this talk of taxation of your industry, and what you do, is something we oppose,” he stated. The secretary continued, “You always get less of anything that you tax. Well, we don’t want to get less of what you do.” Senate Banking Committee Chairman Richard Shelby (R-Ala.) recently wrote CUNA President and CEO Dan Mica and all the state leagues thanking them for expressing their support of regulatory relief and at the same time reiterated statements in earlier press reports that he favored credit unions’ tax exemption. “I recognize the special role that credit unions play in our banking system. Credit unions are non-profit entities, owned and controlled by the people who use them. Their focus on member services enables them to provide a wide range of financial services in an equitable manner. Taxation of credit unions would infringe on this ability and, as such, I oppose it.” Congressman Joe Knollenberg (R-Mich.) recently penned a letter to T&C Federal Credit Union stating his agreement with credit unions’ tax-exempt status. “Clearly, credit unions’ tax-exempt status should not be repealed or altered. The result of removing the tax-exempt status would be a tax increase on credit unions and their members. During a time of pro-growth economic policies, it is counterproductive to institute a new tax on credit unions. “Be assured I will continue to oppose any effort that removes credit unions’ tax-exempt status.” House Minority Whip Steny Hoyer (D-Md.) had this to say about credit unions in March of this year: “Credit unions exist to provide people of modest means with access to savings and credit services, which is important to maintaining an economy of equal opportunity. Credit unions are tax-exempt because they are focused on service and not on profit. They are owned by their membership and are run democratically. “What exactly has changed that these service-oriented organizations should now be taxed, as suggested by a leading Republican? The truth is, nothing has changed that would merit such taxation – taxing not-for-profit credit unions is still bad for consumers.” Just last month, Michigan Senator Debbie Stabenow spoke out in support of the credit union tax exemption. “As a 20 year member of the State Employees Credit Union (Mich.), I have experienced first-hand the important services that credit unions offer their members. I am a strong supporter of the credit union concept and the array of helpful financial services they provide to their members. “I have been very concerned by recent statements by some elected officials who suggest that we should re-examine the tax-exempt status of credit unions. I think this would be detrimental to the health of these institutions and particularly harmful to the consumers who belong to credit unions. I will oppose this re-examination effort and will continue to support credit unions’ tax-exempt status.” “Historically, Congress has viewed credit unions differently than banks because credit unions are non-profit, cooperatively owned institutions,” Congressman Leonard Boswell (D-Iowa) said in a recent statement. “While the financial services sector has shown growth, credit unions have experienced tremendous growth over the past fifty years. Their expansion has resulted in an increase in the number of people joining and electing to do business with their credit union. Over these fifty years their non-profit, cooperative structure has remained true. “Therefore, a tax increase on credit unions would negatively impact thousands of my constituents. This could further dampen the economy at a time when it is sluggish at best. A tax increase would put a drag on Iowa’s economy at a time when families continue to struggle to make ends meet and is something I would not support.” In an interview with CUNA’s CU NewsWatch, House Majority Leader Tom DeLay (R-Texas) expressed his strong support for banks’ right to operate under Subchapter S of the tax code and credit unions’ tax exemption. “I am equally supportive of Americans’ right to voluntarily pool their resources for their own benefit and not be taxed on such an effort. Credit unions embody this principle, and I firmly support the principle of their tax-exempt status.” He also noted his backing of member business lending and regulatory relief.” Independent Representative Bernie Sanders (Vt.) had a statement inserted into the Congressional Record stating, in part, “Credit unions are tax exempt for good reasons, and not because anyone is doing them a special favor. Credit unions are tax-exempt because they are not-for-profit institutions. And under federal law, and rightly in my view, non-profits are exempt from taxes: churches, hospitals, libraries, universities-and credit unions. “It is my belief that credit unions and their members have the potential to be an even more important economic, social and political force in our country in the decades ahead. In a nation facing forces that threaten to rip our economic well-being apart-downsizing, outsourcing, shipping jobs abroad-credit unions remind us that we can work together for the common good. They show us, day after day, that it is not necessary to incorporate the profit motive into every aspect of American life. In fact, credit unions show us how, if profits are not involved, people can come together to help themselves, sustain themselves, and create healthy communities.” Twenty-one California Democrats signed onto a joint letter to Federal Deposit Insurance Corporation Chairman Donald Powell June 24, asking him to revise his public statements supporting the taxation of credit unions. “The credit union federal tax-exempt status is based solely on a credit union’s structure as a not-for profit, democratic, financial cooperative that is member-owned and controlled. The credit union mission of “people helping people” is evidenced in credit unions across America that put the member, or consumer, first-as opposed to banks, whose primary obligation is to the stockholder. In a credit union, one member equals one vote, and earnings are returned to the members. “Finally, as supporters of the current federal tax exemption for credit unions, we are also concerned about the impact taxation might have on consumers and the future safety and soundness of credit unions.” Representative Dale Kildee (D-Mich.) expressed his support of the credit union tax exemption in these words: “I have always been a strong proponent of credit unions and I have worked hard to protect their tax exempt status. Credit unions are unique because they are non-profit financial cooperatives that are owned by credit union members. Unlike large banks, credit unions are not driven by profit and they do not have to pay shareholders, instead the excess income is passed onto credit union members directly in the form of better financial services and benefits. “Eliminating the tax exempt status of credit unions would have a devastating impact on its members because they would be forced to pay higher fees, higher loan rates and they would have lower savings dividends. We should not even consider changing the tax-exempt status of credit unions.” “Revoking the tax-exempt status of CUs would constitute an increase in taxes upon the millions of Americans who are members of CUs. Please be assured I will not support policies that will harm CUs or their members,” Congressman Peter Hoekstra (R-Mich.) has stated. “I believe revoking the tax-exempt status of credit unions could impose additional tax burdens on millions of Americans who belong to credit unions,” Congressman Dave Camp (R-Mich.) has stated. “Please be assured I will not support policies that disadvantage credit unions or their customers. “I fully support the credit union tax exemption. I know you’re concerned about those who would support revoking the tax exemption but, if I have anything to do about it, and I believe I do as a Ways & Means committee member, it isn’t going to happen!” In a statement to the Michigan Credit Union League, Republican Thaddeus McCotter (R-Mich.) stated, “Credit unions must retain their vitality and continue providing for the opportunity and prosperity for all Americans. I will never vote to rescind credit unions’ tax-exempt status, because it would constitute an increase in taxes and a decrease in opportunities for working families and entrepreneurs.”

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