WASHINGTON – If the credit unions are successful in getting a vote on their bill to raise the member business loan limit they might have to navigate the tax waters to do it, with several Senators shopping an amendment on behalf of the bankers that would tax all revenue from MBLs.
The bankers, knowing there is little chance of getting their long-sought repeal of the credit union tax exemption, see the tax provision as a so-called poison pill that would kill make dim prospects of a bill this year painful—if the credit unions can finally get a vote. “This would be a poison amendment,” Paul Merski, executive vice president of the Independent Community Bankers of America, told the Credit Union Journal this afternoon.
Bankers would sell the MBL tax as another measure of raising government revenue to help fight the federal deficits, according to Merski, who expressed confidence the bill MBL bill is dead anyway. “It’s game over for this year,” he said.
The language of the bankers’ amendment would specify that income earned from MBLs shall be exempt from Section 122 of the Federal CU Act, which explains the federal tax exemption for credit unions. It does not remove the overall tax exemption for credit unions.
Both the ICBA and the American Bankers Association delivered a letter to all senators this morning insisting that the credit union bill not be added to a bill renewing the federal guarantee on interest-bearing transactions accounts favored by banks.