Letter to the Speaker of the House, Dennis Hastert regarding the American Jobs Creation Act Subchapter S Provisions
June 14, 2004
The Honorable J. Dennis Hastert
Speaker of The House
H-232 Capitol Building
Washington, D.C. 20515-6501
Dear Mr. Speaker:
The recently introduced "American Jobs Creation Act of 2004" (H.R. 4520) contains provisions that would make significant FSC/ETI changes. It also would substantially revise and expand the Subchapter S tax rules with respect to banking institutions. We write to re-state our position that the Credit Union National Association (CUNA) does not object to the Subchapter S bank provisions or efforts to reduce taxes for bankers. However, we are compelled by recent events to point out the banking trade associations' hypocrisy in these matters.
In a letter dated May 26, 2004, to House Committee on Ways and Means Committee Chairman William Thomas, the American Bankers Association, the America's Community Bankers and the Independent Community Bankers of America urged Chairman Thomas to preserve in any final jobs bill the provisions that would lower taxes paid by Subchapter S bank shareholders. At the same time, these banking associations also announced a coordinated effort to change existing tax law and eliminate the credit union tax exemption, which would increase the tax paid by credit union members.
As we mentioned, we do not oppose the Subchapter S proposals. However, the bankers' coordinated effort also attempts to raise taxes for 85 million credit union members.
Since 1997, approximately 2,109 banks have taken advantage of the Subchapter S special tax status. The American Jobs Creation Act Subchapter S provisions would allow many more banks to elect Subchapter S. The simultaneous effort to tax credit union members is inherently duplicitous.
Thank you for considering our views.
Daniel A. Mica
President & CEO