NAFCU advocacy keeps CU tax exemption safe in final tax bill
The credit union tax exemption – thanks to consistent advocacy by NAFCU and numerous meetings held among key legislators, NAFCU and its members – remained untouched in the reconciled tax reform legislation released Friday by House-Senate conference leaders.
"The preservation of the credit union tax exemption is vital for the 110 million Americans who are credit union members," said NAFCU President and CEO Dan Berger. "NAFCU, on behalf of our member credit unions, thanks President Trump, Treasury Secretary [Steven] Mnuchin, Senator [Orrin] Hatch, Representative [Kevin] Brady, and members of Congress for taking credit unions' concerns on this issue into account throughout the negotiation process.
"As our members know, the credit union tax exemption boosts the nation's economy by roughly $16 billion a year and allows credit unions to offer products with reduced fees and higher savings rates," Berger continued. "The exemption allows credit unions to serve segments of our communities in need of safe, affordable financial products. NAFCU will remain engaged as this measure moves to the House and Senate for final passage."
Berger and other members of NAFCU's legislative affairs team have been actively engaged on Capitol Hill and with the White House to ensure the credit union tax exemption was left alone. In August, the association met with Mnuchin to discuss tax reform efforts and Berger was invited on FOX Business to explain the importance of the exemption. The association has also held numerous meetings with senators, representatives and administration officials throughout the year.
Last month, NAFCU launched a grassroots effort calling on member credit unions to defend the industry's tax-exempt status at the local level as some in the banking industry called for its elimination.
Preserving the credit union tax exemption has been NAFCU's top priority throughout this year's tax reform efforts – and well before. A recent Wall Street Journal article on credit unions' success at protecting their tax status reflected on NAFCU's efforts in 2012 when Rep. Dennis Ross, R-Fla., proposed taking away the credit union tax exemption. Berger called Ross within minutes of receiving the news, the WSJ reports, and said, "Hey, we are coming to see you." Ross pulled back his proposal within hours.
As NAFCU reviews the tax bill, a few provisions worth mentioning include:
- the mortgage-interest deduction is preserved with a compromised cap of $750,000 for newly purchased homes;
- tax-exempt organizations would have to pay a 21 percent tax on any executive salary more than $1 million, which will also apply to deferred compensation plans when monies vest;
- the tax deduction for FDIC premiums for institutions with more than $50 billion in assets is eliminated.
The revised tax legislation must now be approved by both the House and Senate before being signed into law by the president. Republicans hope to have this accomplished before the end of the week.
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