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More tax on CUs would hurt consumers CUNA
WASHINGTON (11/15/10)—Credit unions may “close or convert to for-profit banks” if the current credit union tax exemption is revoked, a move that would provide consumers with “few, if any other mainstream financial choices,” Credit Union National Association (CUNA) President/CEO Bill Cheney said on Friday. “Even if a credit union chooses not to convert, it will inevitably be forced to raise lending rates and fees and lower its returns to its members/ accountholders. Further, taxing credit unions would also divert funds that would otherwise be used to build capital and provide a cushion against any future losses, thereby protecting members and the National Credit Union Share Insurance Fund,” Cheney added. Eliminating the credit union exemption would also essentially raise taxes on 92 million current credit union members, Cheney said. The National Commission on Fiscal Responsibility and Reform's draft report on deficit reduction options, which was released last week, named tax expenditures as one way that the country’s debt could be cut. However, the report did not mention credit unions by name. Options promoted by the report include eliminating all $1.1 trillion of tax expenditures, eliminating and modifying some business tax expenditures, and reforming the tax code itself, while also putting in place “an across-the-board 'haircut' for itemized deductions, employer health exclusion, and general business credits that would take effect in 2013 if reform is not yet enacted." These proposals are in their infancy, and would require a super majority of 14 if the commission's 18 members to be officially recommended to lawmakers. The proposed reforms would also need both congressional and Presidential approval to be passed into law. Cheney last week said that CUNA would continue to work with the commission, the Obama administration and Congress to “help all comprehend the importance of the tax exemption on the long-term well-being of the nation's credit unions and, by extension, the 92 million consumers they serve.”


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