Could Congress Use CU Tax to Reconcile Budget?

WASHINGTON-At a time when the government is looking to tighten its purse strings, the issue of taxing credit unions could come into play. Though it is considered a long shot by credit union lobbyists, credit unions do have the potential to get caught up in the budget reconciliation process. The House and Senate reached an agreement April 28 on a budget resolution (H. Con. Res. 95), which includes reconciliation requests to help reduce the national deficit. The two Ways and Means Committees-which govern taxation-are supposed to look for $3.9 billion in savings for FY2006 and $18.7 billion over five years. According to NCUA Director of Governmental and Congressional Affairs Cliff Northup, “This could add some risk on the tax issue for credit unions.” While it may seem counterintuitive, the large dollar figures could actually be a boon to credit unions because they would not bring in that much money. He added, “It would be one thing if credit unions would fix it all by themselves, but the reality is, credit unions would not raise as much money as [Congress] would need.” NAFCU Director of Legislative Affairs Brad Thaler pointed out that no one, especially Republicans, wants to raise taxes. “It’s a lot more likely they’d try to find savings in different areas rather than imposing new taxes,” he said. Thaler agreed with Northup’s assessment that taxing credit unions would hardly bring in enough money to count. He pointed out that Social Security, Medicare, and Medicaid benefit reductions could bring in a lot more money in larger chunks. However, given House Ways and Means Committee Chairman Bill Thomas’ previous remarks that taxing credit unions should be looked into, Northup contends, credit unions should remain vigilant over the proceedings. Though Thaler concedes taxing credit unions is always an option, he said he does not think it’s “even near the table.” [email protected]