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Credit union trade groups’ recent campaign to defend their income tax exemption has been turned into high gear by a memo being circulated by Republican lawmakers on Capitol Hill listing it among more than 100 ways to cut government costs.
The 50-page document posted by Politico showed its creation date as Jan. 17, but its title, “RECONCILIATION_OPTIONS,” carried the date Jan. 7.
Each item carried an estimated cost or savings, if known, and a line highlighted in yellow “VIABILITY: HIGH / MEDIUM / LOW,” which presumably members are circling. Credit unions are on page 11 of the list:
“Eliminate Exemption of Credit Union Income
$30 billion in 10-year savings
VIABILITY: HIGH / MEDIUM / LOW
Credit unions are exempt from federal income taxes on their earnings. This option would subject credit unions to the federal income tax.”
The item appeared between savings of $50 billion over 10 years by eliminating tax exemptions for employer-paid benefits for transit passes, parking and other transportation, and $20 billion by eliminating tax exemptions for employer-provided onsite gyms.
America’s Credit Unions (AmCU) launched a campaign in defense of the credit union tax exemption Monday that included 30-second ads being distributed online on platforms from YouTube to Instagram.
AmCU and the Defense Credit Union Council (DCUC) have also been flooding congress with letters supporting the tax exemption.
“America’s Credit Unions and our member credit unions have been sounding the alarm and are in regular contact with lawmakers to discuss the importance of the credit union federal tax status, well ahead of the tax battle now brewing on Capitol Hill,” Carrie Hunt, AmCU’s chief advocacy officer, said.
“We will continue our aggressive advocacy to reiterate that the tax status allows us to provide Americans to credit and financial services when banks turn their backs and close their doors,” Hunt said. “We will not back down from the credit union difference.”
DCUC spokeswoman Haleigh Laverty said Thursday that Republicans in the House are exploring the elimination of the credit union tax exemption as a way to fund budget cuts.
“We are focused on mounting a strong response to all current or potential claims from bankers, like those from the ICBA [Independent Community Bankers Association],” Laverty said.
“To cover all bases on Capitol Hill, we continue to send letters to various committees where this issue may surface in discussions and hearings,” she said. “We do fully believe credit unions have a legitimate concern that a tax fight may be on the horizon.”
Laverty said the list is being used in preparation for a bill to be passed through the reconciliation process, which would allow it to be passed by simple majorities in both the House and Senate, and cut off Senate filibusters.
According to The New York Times, the 50-page list is for a bill that includes:
- Provisions for the immigration crackdown;
- A 10% tariff on all imports, which it said would raise $1.9 trillion over 10 years;
- Lowering the corporate tax rate;
- Eliminating income taxes on tips;
- Cuts to Medicaid; and
- Creating new work requirements for Medicaid recipients.
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