Pro-business groups defend CU tax exemption
Thirteen pro-business groups, including the Competitive Enterprise Institute and Americans for Tax Reform, sent a letter yesterday to Senate Finance Committee Chairman Orrin Hatch, R-Utah, to defend credit unions' federal income tax exemption. NAFCU was successful in maintaining the industry's tax-exempt status throughout tax reform efforts last year; however, Hatch in January sent a letter to the NCUA questioning the status in light of recent field of membership changes.
"The undersigned groups write to you today to underscore the importance of keeping that tax relief in place for everyone and, in particular, firms that fulfill the saving and borrowing needs of consumers," the letter to Hatch states. "We ask you and other committee members to be wary of any proposal that penalizes the millions of Americans who have chosen to join credit unions to advance their financial needs."
"NAFCU and our member credit unions are pleased to see these prominent, pro-business organizations recognizing the value credit unions provide to our country and the American consumer," said NAFCU President and CEO Dan Berger. "Credit unions provide safe, affordable financial products to 111 million Americans and actively support their local communities. The industry's tax status is a component of being able to do that."
In the letter, the groups also note President Ronald Reagan's efforts to modernize credit unions' field of membership rules, and credit unions' role in providing financial services to U.S. military members.
"We also ask that the committee note that credit unions are especially important to our troops. The two largest credit unions do have substantial assets, but they are essentially limited to serving the families of active-duty military and veterans and some civilian defense employees," the groups write.
NAFCU has defended the industry's tax status and the NCUA's field of membership changes to Hatch and against attacks from various banking and tax associations. NAFCU has reminded Hatch and other congressional leaders that roughly one-third of banks are Subchapter S corporations that pay no corporate income tax; the pro-business groups make a similar argument in their letter as well.
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