One of my pet peeves about the industry is that, on occasion it lets its fear over losing the tax exemption venture into the realm of paranoia with the result that we crowd out other important legislative initiatives. Then again, in the immortal words of Henry Kissinger, “Even paranoids have enemies” This time I’m leaning with the paranoid group.

There are several factors that make our tax exempt status more vulnerable now than at any point since the last round of major tax reform back in 1986. Here’s why:

By a 51-49 vote last night, the Senate pushed through a budget resolution setting the stage for a detailed debate over tax policy. It includes authority for a $1.5 trillion tax cut while maintaining a commitment – on paper anyway – to balancing the budget in ten years. While the budget resolution doesn’t mean all that much, it does underscore the bizarre dynamics which are going to make this one of the most unpredictable legislative debates any one of us has seen in our lifetime. I say that with full knowledge that many credit union veterans have been around a long time.

continue reading »