Feb. 27, 2014 – NAFCU President and CEO Dan Berger lauded House Ways and Means Chairman Dave Camp, R-Mich., Wednesday for ensuring that the credit union tax exemption is not targeted in a discussion draft that could serve as a potential model in any future broad tax reform.
“Today’s draft, based on our initial review, is good news and consistent with what NAFCU lobbyists have been hearing all along – that Congress has no appetite for repealing credit unions’ federal tax exemption,” Berger said upon the draft's release. “We thank credit unions for using our tax studies to make the case on the value of the exemption to consumers and the economy. And we thank Chairman Camp and committee members, both for their leadership and for their support of credit unions’ continued exemption.”
NAFCU holds preservation of the credit union tax exemption as its highest priority. Congress asked that the exemption be justified, and in response NAFCU released landmark studies in 2012 and again this year on the value of the exemption to consumers and the U.S. economy. The 2014 study shows $17 billion in annual benefits to the U.S. economy from the presence of credit unions. It also shows that eliminating the credit union tax exemption would lead to a reduction of 1.5 million jobs over the next 10 years and a decrease in federal revenue.
NAFCU also reviewed the draft’s treatment of unrelated business income tax and found that the draft would make no changes in UBIT as it relates to credit unions. Federal credit unions are exempt from UBIT due to their status as instrumentalities of the federal government.
Camp is releasing his draft as he completes his final term as chairman of the Ways and Means Committee with an eye toward future work on reform. Senate Finance Chairman Ron Wyden, D-Ore., is interested in taking up broader tax reform once a series of tax extenders that expired last year is addressed.
Senate leaders said they do not expect to see tax reform advance this year. NAFCU will continue to track developments and any potential impact on credit unions.
Draft legislation and related summaries are online.