WASHINGTON–Revoking the tax-exempt status of credit unions is among the tax policy changes being called for in a new white paper from a bankers’ group.
The Independent Community Bankers of America (ICBA) has released “ICBA Principles for Tax Reform,” a white paper detailing the association’s principles and recommendations for reforming the nation’s tax code. The ICBA said it supports tax reform and is urging Congress to “modernize and simplify a complex and inefficient tax system.”
Among the policy points in the ICBA white paper is a call for “parity in the taxation of financial services providers, such as tax-exempt credit unions and Farm Credit System (FCS) lenders who are multibillion-dollar entities and expanding their presence in markets that taxpaying community banks traditionally serve.”
Among the other changes the ICBA wants to see:
- Allowing businesses to continue to fully deduct interest expense as an ordinary and necessary cost of doing business, since changes could negatively impact the livelihood of small businesses, farmers and ranchers
- Modernizing Subchapter S of the tax code to better allow community banks to raise capital
- Lowering the marginal tax rates on individuals along with C-corporation and S-corporation businesses
- Repealing the estate tax as it “endangers the intergenerational transfer of many community banks and small businesses served by community banks”
- Preventing new taxes or fees specifically targeting the commercial banking sector or their customers, as sector-specific taxes distort the market and generate counterproductive outcomes
“Our nation’s tax code impacts the strength of our economy and tax reform will require important and fundamental choices about our economic future. The goal of ICBA’s tax reform white paper is to help clarify the choices that lie ahead,” said ICBA President and CEO Camden R. Fine in a statement. “The views and recommendations set forth in the paper were developed with input from community bankers nationwide. Their unique perspective on tax reform in this debate is centered on strengthening the community bank/small business partnership, which is the foundation of local economic growth and prosperity.”
The ICBA went on to say that given community banks’ critical role in providing credit to consumers, small businesses, farmers and ranchers, it is particularly committed to maintaining the interest deduction for these borrowers. “The use of debt financing and the business interest deduction helps create local businesses and fuels their growth, creating jobs and economic empowerment at the community level.”
The ICBA Tax Reform white paper can be found here.