Thomas says no tax for CUs

WASHINGTON (11/4/05)—House Ways and Means Committee Chairman Bill Thomas (R-Calif.) said Thursday that he has no plans for legislation that would add federal income tax to credit unions, regardless of their size or the diversity of their service offerings.

"No, I don't think you should remove the tax-exempt status," Thomas said of credit unions at the conclusion of a hearing Thursday on that subject. "But I won't put a period there."

Before the start of yesterday's nearly six-hour hearing on the credit union tax exemption, House Ways and Means Committee Chairman Bill Thomas (R-Calif.) with CUNA witness Harriet May (left) and CUNA President/CEO Dan Mica (right). (Photo provided by CUNA)

He said he is concerned by the credit unions movement's inability to document information that would support its arguments that credit unions are fulfilling their mission and should retain their tax status. The chairman addedthat he is interested in the National Credit Union Administration (NCUA) requiring more transparency from credit unions, more documentation, and Community Reinvestment Act (CRA) data.

While Ways and Means oversees tax policy, it does not have jurisdiction over the kind of transparency and documentation issues raised by the chairman.

The Credit Union National Associations (CUNA) and the state leagues have been building a response to the Committee's inquiry into the credit union tax status since October when it was confirmed there would be a hearing.

The credit union movement took the committee's examination very seriously because of the devastating effect increased taxes would have on credit unions, their members, and the American consumer in general.

CUNA President/CEO Daniel Mica said Thursday, "The unwillingness of the chairman to tax credit unions, and the expressions of support voiced by a number of member of the Ways and Means Committee, reflect the tremendous grassroots efforts that you have been engaged in, particularly over the last several weeks."

"Credit unions' grassroots activism was noted at the hearing, and we have heard from legislators individually who told us credit union contacts have had the desired effect," Mica said, adding, "My deep thanks and appreciation to credit unions, and the leagues, for their tireless efforts. For all that happened today—and what could have happened—I believe we in the end we did extremely well."

Testifying before the Committee on behalf of CUNA, Harriet May reminded the tax panel that the credit union tax status was re-affirmed as recently as 1998 based on the structure of credit unions.

She said that contrary to current rhetoric, size has no connection to a credit union's tax structure.

Related stories: 2005 Hearing on CU Taxation