WASHINGTON (2/26/14, UPDATED 2:04 p.m. ET)--The specific credit union tax status is left untouched in a tax reform plan released today by House Ways and Means Committee Chairman Dave Camp (R-Mich.), but the plan does raise some additional tax issues that are of concern to the Credit Union National Association.
CUNA President/CEO Bill Cheney said, "The release of the tax reform proposal today by House Ways and Means Committee Chairman Dave Camp marks the beginning of an important new chapter in the tax reform process. We are gratified that the specific credit union tax exemption is untouched in the Camp proposal, based on our initial read. But we do have concerns that some federal credit unions could be subjected to tax liability under other portions of the tax code.
"After three years of mostly behind-the-scenes efforts, the chairman has found that there is no reason to change or eliminate our tax exemption. We consider this an endorsement of our long-held position that credit unions' cooperative, not for profit structure remains the bedrock upon which the tax exemption is built. Reinforcing our position over the past nine months were the actions by CUNA, state associations and credit unions, which together amassed 1.3 million contacts with lawmakers urging them 'don't tax my credit union.'
"We are concerned that the tax proposal appears to subject federal credit unions to a tax on 'unrelated business activities' for the first time. We will be working with lawmakers to obtain more clarity on this provision.
"The Camp proposal is the first word on tax reform, not the last. We know the tax reform process will be long, and will not conclude until a president signs a tax reform bill. Throughout the process, credit unions will continue to actively advocate for the credit union tax status."
CUNA, state credit union associations, credit unions and credit union members have been tireless in their advocacy on behalf of the credit union tax status. The "Don't Tax My Credit Union" campaign started in May 2013, garnering the 1.3 million direct messages to the U.S. Congress noted by Cheney.
Camp's plan to overhaul the tax code does recommend that the biggest U.S. banks and insurance companies would be required to pay a quarterly 3.5 basis-point tax on assets over $500 billion, according to various media outlets.
More generally, the plan for simplification of the tax code would cut the top income tax rate to 25% from 39.6% and impose a surtax on some of the wealthiest households in the country.