Why tax reform can threaten the credit union tax exemption
An explanation of the most recent threat to the industry’s exemption.
by: Erik Payne
The U.S. Senate Committee on Finance is a 26-person (14 Republicans, 12 Democrats) committee that oversees federal spending and revenue, specifically with matters relating to taxation. It’s widely considered one of the most powerful committees in Congress.
In an afternoon session on Day 2 of the Governmental Affairs Conference titled “The Politics and Policies of Tax Reform and Its Implications to Credit Unions,” the credit union tax exemption was the topic of choice.
Moderator Terry West, president and CEO of VyStar Credit Union, and panelists Chris Campbell, the committee’s staff director, and Mark Gerson, a tax lobbyist for Miller Chevalier, spoke for a little less than 75 minutes on how and why the credit union tax exemption could be eliminated.
The Federal Case For Eliminating The Credit Union Tax Exemption
As not-for-profit institutions that exist to serve their member-owners, credit unions are tax-exempt entities. This we know. The federal tax code marks these exemptions as “preferences,” and by basic way of explanation, the more preferences that exist in the tax code, the higher the overall tax rates. Fewer taxable entities have to pay more, resulting in a corporate tax rate that, as many including Campbell — a Republican it should be noted — pointed out over the course of the conference, is the highest in the world.
continue reading »
