In a letter to Committee for a Responsible Federal Budget President Maya MacGuineas released Friday, NAFCU President/CEO Fred Becker takes issue with the group’s new policy paper on corporate tax reform and a corresponding interactive tax reform calculator.
Both CRFB releases include the repeal of the credit union tax exemption as a means to lower the corporate tax rate.
The white paper, released Wednesday, said, “Within the tax corporate tax code, there are a number of narrowly focused provisions which benefit only one or a few industries. Though some of these tax expenditures may have important justifications, they can also lead to an unequal playing field where the government is picking winners and losers.”
“Examples include various tax preferences for extractive industries like oil and gas, the exemption of credit union income, the low-income housing credit which subsidizes housing construction, and the Blue Cross/Blue Shield deduction.”
The paper is posted on the CRFB’s website, promoted on its front page, and includes a tax reform calculator that invites users to create their own tax reform plan. A list of possible reforms, including credit union tax exemption in a section of possible tax expenditures that could be eliminated, can be “checked” and deducted from the corporate tax rate.
The interactive tool cites data from the Joint Committee on Taxation, and values the credit union exemption as having a tax revenue value of $2 billion per year. Eliminating the credit union exemption, the calculator claims, would generate enough tax revenue to drop the corporate tax rate 0.2%.
Becker, in his reply, wrote, “While we fully recognize and appreciate the need for a comprehensive national dialogue on the fiscal future of our country and support efforts to explore related policy options, we believe that the presentation of the tax calculator is such that users who choose to hypothetically eliminate the credit union tax exemption would, unfortunately, not have the means to accurately perceive the impact on consumers, businesses and the U.S. economy.”
Becker urges the committee to review a recent NAFCU study on the credit union tax exemption, that found removing the credit union tax exemption would actually cost, not save, the federal government $15 billion in lost income tax revenue over 10 years, due to the negative impact on the nation’s economy.
That study also found that GDP would be reduced by $148 billion and 1.5 million jobs would be lost over the next decade, Becker added.
Becker asked in the letter to meet with MacGuineas to discuss the issue.
Many speakers at NAFCU’s Congressional Caucus earlier this month said Congress intends to tackle tax reform next year, and the credit union exemption has already been targeted by the banking lobby.