Sen. Richard Shelby (R-Ala.), chairman of the Senate Banking, House and Urban Affairs Committee, declined to specify whether or not he supports keeping the credit union tax exemption in place as part of a tax reform package.
CU Times approached Shelby Feb. 10 in the Dirksen Senate Office Building and asked him if he thinks the credit union tax exemption should be protected.
"Well, I'm for fundamental tax reform. Some of you have followed my career. Basically, I was the first one when I was in the House to introduce the flat rate tax. I would start all over if I had real fundamental tax reform – that's probably not going to happen because the tax code is made of who can hire the biggest, powerful lobbyists – it's all an exemption so when you say tax reform, for whom, we ought to look and see," Shelby said after a Senate Banking Committee hearing on regulatory relief for small financial institutions.
Shelby was asked again if he thought credit unions should remain tax-exempt. He replied by saying he belonged to a credit union but did not directly address the tax issue.
"Well, I'm not advocating whether the tax – I belong to a credit union. They were created that way. They've got, like any financial system, got their pluses and minuses, whether it's a credit union, small bank, large bank, investment bank, merchant bank, whatever but I'm not on the finance committee. I'm an appropriator and banker," he said.
CU Times pointed out that Shelby would ultimately have to vote on any tax reform package that comes before Congress in the future.
"I know. We'll see what happens," he said.
John McKechnie, partner at Washington-based consulting firm Total Spectrum, said Shelby was referring to a situation where many industries across the board would see reduced tax benefits as part of tax reform.
"The chairman is alluding to an 'everybody gets a haircut' scenario, which would be concerning if it would ever develop," McKechnie said, adding that has not heard that strategy being discussed by the tax committees.
"This is why credit unions need to be extremely vigilant as the tax reform discussions begin to gel," he said.
Both CUNA and NAFCU donated to Shelby's re-election campaign in 2010. CULAC contributed the maximum $10,000 to his re-election committee and $12,000 to his leadership PAC while NAFCU donated $3,500 to his re-election campaign. Since 2010, CUNA said it contributed another $6,000 to Shelby's leadership PAC.
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