Treasury Drops CU Tax Estimate by 1/3 Posted by Association of Vermont Credit Unions on 10:43 AM

CU Times reports that the latest Treasury Department estimate of tax expenditures has reduced the five-year estimate of the cost of the credit union tax exemption by almost a third. Treasury now estimates the credit union tax exemption will cost $10.562 billion in lost tax revenue between 2018 and 2022. A year ago, it estimated the credit union tax exemption would cost the federal government $15.763 billion between those same years. No reason for the change is given.

Treasury also reports more than 50 tax expenditures larger than the credit union tax exemption.
The congressional Joint Committee on Taxation recently estimated that the credit union tax exemption will cost the federal government $9.9 billion between 2018 and 2022 . . . even less than the administration’s estimate.  The tax expenditure figures are used by policymakers when they are writing tax legislation.

The credit union tax exemption came under fire this year, when Senate Finance Chairman Orrin Hatch (R-Utah) questioned whether it was outdated, saying there is little difference between credit unions and banks. Hatch asked the Internal Revenue Service to require federal credit unions—at least the largest ones—to file informational tax returns. IRS officials did not agree with Hatch’s request. Hatch is retiring at the end of this year and so far, no other member of Congress has made similar requests.

Credit union taxation is a perennial issue for banking groups contending that credit unions have an unfair competitive advantage because of the tax exemption.