The credit union industry recently called on Congress to defend the credit union tax exemption after leaders of the Senate Finance Committee sent a letter asking lawmakers to establish a “blank slate” tax reform framework.
Senate Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch said in a letter last week that beginning with a “blank slate” tax code would result in a “simpler, more efficient and fairer tax code.”
“That is, a tax code without all of the special provisions in the form of exclusions, deductions and credits and other preferences that some refer to as ‘tax expenditures,” the committee members said, referring to the “blank slate.”
Baucus and Hatch urged their colleagues in the Senate to submit proposals for tax expenditures that improve fairness in the tax code, help grow the economy and promote policy objectives before the end of the month.
Dan Berger, the executive vice president of government affairs at the National Association of Federal Credit Unions said, however, that removal of the credit union tax exemption would force many credit unions to convert to banks or close down.
“Without credit unions, for-profit banks would remain unchecked and likely increase rates and fees on consumers,” Berger said. “Additionally, many consumers would not have access to traditional financial services institutions and have no choice but to turn to high-cost predatory alternatives.”
Berger cited a NAFCU study that showed eliminating the tax exemption would lead to a loss of 150,000 jobs per year over the next 10 years, as well as a net loss of revenue to the federal government.