The National Association of Federal Credit Unions (NAFCU) VP of Legislative Affairs, Brad Thaler, today sent a letter to Chairman Charles Boustany and Ranking Member Richard Neal on the Committee on Ways and Means Subcommittee on Tax Policy, urging them to keep the credit union federal tax exemption as they consider tax reform proposals. The letter was also sent to members of the Subcommittee on Tax Policy.
Tax reform will likely be a high-priority piece of legislation after a new president is elected. This could mean changes for financial institutions including tax exemptions, property tax rates, and mortgage interest deductions.
The president’s budget plan, which will go into effect October 1, 2016, talks about several reforms, including a tax reform plan that would "modernize the business tax code to make it fairer and more efficient, and to create jobs,"according to the fact sheet released by the The White House Office of the Press Secretary. In addition, two bipartisan agreements were passed to prevent the return of "harmful sequestration funding levels in 2018 and beyond, replacing the savings by closing tax loopholes and reforming tax expenditures, and with smart spending reforms."
A new bill passed in the New York State Senate could be the key to easing the burden for New York City taxpayers and could be a model for other states to follow in the future. The bill, which has now been sent to assembly, would provide tax relief to residents and businesses in New York City by creating a property tax cap that would save taxpayers $4.5 billion by 2019.
It was sponsored by Senator Andrew Lanza (R-C-I, Staten Island) and "limits future tax increases to provide real savings to taxpayers that would create jobs by lowering the cost of doing business, encourage affordable and supportive housing construction, and give more financial security to small businesses and residents on fixed incomes," according to a release from the New York State Senate.
Thaler noted in his letter, "The cumulative benefit credit unions provide the greater economy totals over $17 billion a year, according to an independent study released by NAFCU in 2014. This number far outpaces the cost of the credit union tax exemption and any potential revenue that would be raised by eliminating the exemption. As the study also shows, altering the tax status of credit unions would have a devastating impact not only on credit union members across the country, but also on consumers and small businesses in general. Eliminating the credit union tax exemption would result in the loss of 150,000 jobs a year, a shrinking of the GDP and a net loss of revenue to the federal government."
Thaler stated that the tax exemption is an issue of survival for credit unions and their 103 million members.
"Despite what some claim, there remain significant regulatory and statutory differences between not-for-profit member-owned credit unions and other types of financial institutions–including limits on who they can serve and their ability to raise capital," he wrote in the letter. "During the financial crisis, credit unions performed well, continuing to lend to consumers and small businesses that were turned down by the nation’s larger banks. Credit unions are proud of their continued service to Main Street America."