The sacred cow, tax exemption for credit unions now being considered for elimination? Can this be?
The origins of the credit union industry’s current tax exemption reach back to the Great Depression, a time when basic financial services were extremely limited for low- and moderate-income Americans. Congress originally allowed credit unions generous tax and regulatory advantages in the 1930s for the purpose of helping serve individuals of modest means. Individual credit unions were largely limited to serving individuals sharing a common bond — in most cases, the same employer or occupation.
While the credit union tax subsidy has continued for seven decades, today’s modern financial services industry is robust, highly competitive, and offers a plethora of products and services readily available to all consumers.
Over the decades, the tax-exempt credit union industry has changed dramatically too. Credit unions have expanded aggressively in size and scope.
As the Federal Government looks for ways to dig out of the massive debt we have taken on in the past two years, the Bipartisan Policy Center’s Debt Reduction Task Force last week released a 140-page report outlining a plan to cut $6 trillion from the federal debt by 2020.
- Eliminate the tax exempt status for credit unions.
- A 6.5 percent national sales tax to lower the national debt.
- A five-year freeze on defense spending.
- A four-year freeze on non defense domestic spending.
- Reductions in farm program spending.
- The corporate tax rate would be lowered to 27 percent.
- Individual taxes would have only two rates — 15 percent and 27 percent.
Let me hear from the Credit Union’s, will this elimination help or hurt the credit union industry?