Credit union leaders across California and Nevada are celebrating a significant legislative victory after the U.S. House Ways and Means Committee on Capitol Hill advanced its portion of a budget reconciliation bill without making any changes to the long-standing credit union tax status. However, the advocacy fight is not finished.

The bill, which includes tax reform provisions, now heads to the full House of Representatives for a floor vote. First, it goes to the House Budget Committee, where it will assemble sections from each House committee into a single bill that then goes to the House floor. Essentially, Congress is going to compile a bill in the House and try passing it by Memorial Day (May 26), and then this whole process moves to the Senate.

This past week, the committee concluded an extensive 18-hour markup session going into early Wednesday morning, ultimately voting 26-19 to send the tax package forward. Notably, credit unions were not mentioned during the mark-up process, signaling that efforts to alter their tax status were not included in the final committee language. This follows the release of the bill text earlier in the week, which also did not contain provisions targeting credit unions.

The California Credit Union League and Nevada’s Credit Unions wants to thank leadership in the House Ways and Means Committee for recognizing the immense value credit unions have on communities and securing the credit union tax status. It is a major victory for 142 million credit union members across the United States — with more than 14 million in California and over 400,000 in Nevada. It is also a win for small businesses who rely on credit unions, as it allows these community-first institutions to continue to serve Main Street America without limitation.

Thank You for Your Efforts

This legislative win is attributed to a relentless, multi-month advocacy campaign spearheaded by the California Credit Union League, Nevada’s Credit Unions, America’s Credit Unions, and other state leagues/associations, individual credit unions, and their members. Efforts included:

• Generating hundreds of thousands of grassroots messages directly to lawmakers through the “Don’t Tax My Credit Union” campaign.
• Meeting with key tax-writing committee members, House and Senate leadership, and officials from the White House National Economic Council, U.S. Office of Management and Budget (OMB), and the U.S. Treasury Department.
• Commissioning and publicizing an independent economic study demonstrating that taxing credit unions and potentially reducing their market share could cost bank customers billions annually in higher rates and fees.
• Placing opinion and editorial pieces in the news media that highlight the credit union difference and the negative impact of a tax change, including a recent feature on ABC-7 in Southern California.
• Launching digital advertising campaigns targeting key policymakers.

The protection of the credit union tax status comes despite ongoing lobbying efforts from community banks, which have actively pushed for taxing credit unions, particularly those with over $1 billion in assets. Credit union advocates have countered that the tax status is tied to their not-for-profit, member-owned structure and mission of “people helping people,” not their size. They also point out that a large portion of banks operate under Subchapter S status, which also provides tax exemptions.

In addition to preserving the tax status, other provisions of the House Ways and Means Committee bill were supported, including allowing credit unions to serve as permissible account holders for new “Money for Growth and Advancement” savings accounts and permitting car buyers to deduct interest paid on loans for vehicles assembled in the U.S.

While the successful committee mark-up is a critical step, the legislative process continues. The bill is tentatively scheduled for a full House vote before June. It will then move to the Senate for consideration.

Please Continue to Amplify Our Voice

Vigilance and continued member engagement are still essential as the bill progresses. The California Credit Union League and Nevada’s Credit Unions are requesting credit union leaders to continue asking their members, employees, and advocates to make their voices heard on Capitol Hill through our Connect For The Cause (CFTC) site.

Resources:

• To help your credit union maximize its impact, you can leverage this list of best practices.
• A Spanish-language version of CFTC is located here if needed.
• Email Stephanie Cuevas for any campaign questions. You can also email Madison Lee for specific questions regarding your local CFTC messages sent to members of Congress.

Please continue to amplify your collective voice.

Open Letter Thanking Members of Congress

Credit union leaders also have an opportunity to join together with their peers from across the country by signing-on to an open letter to Congress.

The letter, organized by America’s Credit Unions, allows credit union CEOs to thank lawmakers and address the need to keep the credit union tax status out of the budget reconciliation bill as it moves through the legislative process.

The letter also cites the independent study commissioned by America’s Credit Unions that found removing the credit union tax status would — over the next decade — cost the federal government $30 billion in lost income tax revenue, $266 billion in Gross Domestic Product (GDP) economic reduction, and a loss of 822,000 jobs.