In late June, Senate Finance Committee leaders began circulating a letter among fellow senators (known on Capitol Hill as a “Dear Colleague” letter). The letter informed colleagues that the committee intends to mark up tax reform legislation in October and wants to schedule a floor vote in November.
So Sens. Max Baucus, D-Mont., and Orrin Hatch, R-Utah—chairman and ranking member of the Finance Committee, respectively—asked senators to make recommendations about what should—and shouldn’t—be included in a new tax code.
Senators were asked to start with a “blank sheet,” as if no deductions, exemptions, credits, or any other type of tax preference existed.
This includes the credit union tax exemption.
When the Finance Committee leaders issued their letter, I released a statement reinforcing our call on credit unions to contact their senators immediately, insisting that our tax exemption gets back on that sheet of paper.
During the next four weeks, as part of our “Don’t Tax My Credit Union” campaign, credit unions responded—with hundreds of thousands of emails, letters, Facebook posts, tweets, and more. Many of those contacts with Congress came from credit union members themselves.
And that’s the way it should be, because it’s members who expect so much from their credit unions—but stand to lose just as much. As we told President Obama in a letter in late June, repealing our tax exemption would slowly eliminate the credit union option for millions of Americans.
If taxed, we told the president, a significant number of larger credit unions would likely convert to banks to take advantage of the greater flexibility that charter offers. An equally significant number of smaller credit unions could simply liquidate, we pointed out. The remainder—as wholly owned cooperatives—would have to pass the burden of taxation through to their members, increasing their costs for accessing financial services.
We told the president that taxing credit unions would undermine the reason credit unions were formed. It would amount to a gift of tens of millions of customers to the forprofit banking industry—at a time when the public is exceptionally dissatisfied with that industry and is actively pursuing alternatives.
Conversions to banks, outright liquidations, and higher costs for accessing financial services aren’t what members expect when they join credit unions.
This is why it makes sense to ask members to tell Congress: “Don’t Tax My Credit Union.”
And, they’re likely to respond positively.
Our annual voter poll also tracks responses from the more than 40 million members who consider credit unions their primary financial institutions (PFIs). For 2013, the voter poll found that 93% of these PFImembers would side with credit unions in a disagreement with banks.
And, since banks have ramped up their bleating about how Congress must use this tax reform effort to eliminate the credit union tax exemption, it only makes sense that credit unions call on these members and urge them to speak out on this critical issue.
The bottom line: If credit unions can successfully tap their members to stand up for their credit unions—as many as possible—we can and will succeed in keeping our tax exemption on that sheet of paper.
And, we’ll also show the real power of credit unions, which is rooted in our millions of members. By tapping their support, we’ll also create awareness of credit unions—one of the key goals in our “Unite for Good” effort to establish a shared, strategic vision for the movement: “Americans choose credit unions as their best financial partner.”
It’s my hope—and expectation— that when the Senate considers tax reform legislation this fall, they’ll see the credit union tax exemption boldly written on the formerly “blank sheet”—and the words “Don’t Tax My Credit Union” will be ringing in tax writers’ ears.
Once the Financial Crimes Enforcement Network’s new customer due diligence rule becomes effective May 11, 2018, credit unions will be required to identify and verify the beneficial owners of business-type accounts.
The 2017 CUNA GAC kicks off Feb. 26, registration starts Sunday and leads into that evening’s ED (Filene) Talk, and continues Monday with the kickoff of the general session and a number of breakout sessions.