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CUNA seeks Treasury meeting to discuss tax report
WASHINGTON (12/27/07)—The Credit Union National Association (CUNA) recently asked the Treasury Department to clarify its rationale behind failing to remove credit unions from a discussion document on tax reform when the department removed other, more questionable, entities from the white paper. Specifically, CUNA noted that the Treasury’s revised “Approaches to Improve the Competitiveness of the U.S. Business Tax System for the 21st Century,” issued last week, focused on repealing various business tax breaks in the federal code, listing the credit union tax exemption as a possible target. In a letter to Treasury Secretary Henry Paulson , CUNA President/CEO Dan Mica underscored CUNA’s understanding that the white paper does not represent a proposal by the Treasury to change tax policy. However, Mica questioned how credit union concerns were not addressed in the revised report while mention of such bodies as state and municipal governments was eliminated. Mica reiterated to Paulson that listing the credit union tax exemption among possible tax revisions wholly contradicts a 2004 letter to CUNA from President George W. Bush, in which he stated, "I support strongly the tax-exempt status of credit unions, and will continue to highlight the important contributions that credit unions make to our financial system.” Further, the CUNA letter noted that the entities that have been removed from the original white paper have a greater impact on the tax system than the credit union tax exemption could ever have. “Investors do not have the ability to invest in credit unions in order to gain a tax advantage,” CUNA wrote. “In contrast, state and municipal governments do issue tax-exempt bonds that attract investors in high-tax brackets precisely because of the resulting tax benefits of state and municipal bond investments vis-à-vis non-tax-favored investments. “Credit unions should be eliminated from this report because the credit union tax exemption plays little role in investment decisions, whereas the tax-exempt entities eliminated from the December 20, 2007 draft of this report do influence investment decisions because of their tax-favored status.” In his letter, Mica repeated CUNA’s request, made when the first draft was released during the summer, for an opportunity to meet with Paulson to discuss the issues involved. At that time, CUNA wrote to Paulson questioning the Treasury's suggestions that a way to reduce corporate income taxes would be to repeal various business tax breaks, listing the exemption of credit union income among the preferences. That letter noted that the Treasury paper fell silent on the "substantial benefits of credit unions to consumers," but the Treasury document praised Subchapter S Corporations which a government study showed cost the government $726 million in lost revenues in 2006 alone.


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