WASHINGTON (2/27/14)--The specific credit union tax status is left untouched in a tax reform plan released Wednesday by House Ways and Means Committee Chairman Dave Camp (R-Mich.), and staff of the tax writing committee have clarified that the proposal has "no intention of imposing any additional taxes on credit unions."
The discussion draft of the tax reform plan does not change or eliminate the specific credit union federal tax exemption. CUNA President/ CEO Bill Cheney said the association considered that to be "an endorsement of our long-held position that credit unions' cooperative, not for profit structure remains the bedrock upon which the tax exemption is built."
"Reinforcing our position over the past nine months were the actions by CUNA, state associations and credit unions, which together amassed 1.3 million contacts with lawmakers urging them 'don't tax my credit union,'" Cheney added.
However, as CUNA experts were reviewing the details of the discussion draft of the proposal yesterday afternoon, they found that the provisions addressing taxes on unrelated business activities (or UBIT) seemed to subject federal credit unions to the tax for the first time.
CUNA senior staff, early Wednesday evening, contacted senior staff of the House Ways and Means Committee, pointing out the impact of the UBIT provisions on federal credit unions and asking why the provision had been applied.
"As a result of our discussion, the Ways and Means Committee senior staff members told us that it was never their intention to impose any additional taxes on federal credit unions," Cheney said after the discussion. "Further, they told us that anything that would impose taxes on credit unions--including UBIT--was unintentional and that is why they have established a process that includes release of a discussion draft."
Cheney added that credit unions greatly appreciate the willingness of the Ways and Means Committee staff to listen to their concerns and respond accordingly. "We look forward to working with them, and Chairman Camp, as the tax reform process moves forward," he added.
The CUNA leader added that the Camp proposal is the first word on tax reform, but not the last. "We know the tax reform process will be long, and will not conclude until a president signs a tax reform bill. Throughout the process, credit unions will continue to actively advocate for the credit union tax status."
CUNA, state credit union associations, credit unions and credit union members have been tireless in their advocacy on behalf of the credit union tax status. The "Don't Tax My Credit Union" campaign started in May 2013, for example, producing the millions of direct messages to the U.S. Congress noted by Cheney.
Camp's plan to overhaul the tax code does recommend that the biggest U.S. banks and insurance companies would be required to pay a quarterly 3.5 basis-point tax on assets over $500 billion, according to various media outlets.
More generally, the plan for simplification of the tax code would cut the top income tax rate to 25% from 39.6% and impose a surtax on some of the wealthiest households in the country.