Deficit Reduction Panel Report Calls for Elimination of CU Tax Exemption

CU Times - 12/1/2010 - By Claude R. Marx

A report that is likely to be voted on this week by a presidentially appointed commission on deficit reduction recommends eliminating business tax expenditures including the tax exemption for credit unions. 

The panel doesn’t mention the credit union tax exemption by name but the report released today describes these expenditures as “another name for spending through the tax code.” 

The report concludes that the changes to tax and fiscal policy are needed because the country is “on an unsustainable fiscal path. Spending is rising and revenues are falling short, requiring the government to borrow huge sums each year to make up the difference. We face staggering deficits.”

When the Treasury Department did an analysis in 2005, it estimated the annual revenue from taxing credit unions would be $1.39 billion while Congress’ Joint Committee on Taxation estimated $1.30 billion. The Tax Foundation, in a study funded by the Independent Community Bankers of America, concluded during that same year that the annual revenues from such a tax could be as high as $3 billion.