President Trump's tax proposal, released Wednesday, so far poses no direct threat to the tax exemption that benefits credit unions.
But the principles the administration released are general and merely represent the starting point for a debate over tax policy.
And as Congress searches for ways to offset tax cuts, it may look to so-called tax expenditures—provisions of the tax law that benefit specific industries, including credit unions.
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The Trump principles does include a proposal to "eliminate tax breaks for special interests," but provide no specific proposals to do so.
And the administration said that throughout the month of May, administration officials will meet with stakeholders and will continue to meet with members of Congress to craft a tax plan that can pass both chambers.
A report by the congressional Joint Committee on Taxation earlier this year estimated that the credit union tax exemption will cost $14.4 billion between 2016 and 2020.
Credit unions are taking no chances about the tax exempt status and are pushing Congress to leave it alone.
"Eliminating the credit union tax exemption would result in the loss of 150,000 jobs a year, a shrinking of the GDP and a net lossof revenue to the federal government," Brad Thaler, NAFCU's vice president of legislative affairs said in a letter to congressional leaders on Wednesday.
The Trump plan would cut the business tax rate to 15% and would reduce the number of individual income tax brackets from seven to three. Trump also proposed to eliminate the estate tax and the alternative minimum tax.
The plan could cost as much as $7 trillion over the next decade, according to some estimates.
The Independent Community Bankers of America earlier this year selected ending the credit union tax exemption as one of its priorities for the year. The bankers contend that the credit union model is outdated.
However in his Wednesday letter, Thaler said that an independent study released by NAFCU earlier this year showed that the cumulative benefit credit unions provide the economy totals $16 billion a year.
And he added that the tax exemption represents an issue of survival for credit unions.
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