WASHINGTON—The Defense Credit Union Council Tuesday expressed its concerns to the Senate Finance Committee over the nomination of Ken Kies as Assistant Secretary of the Treasury for Tax Policy.
Given Kies’ history of advocating for the repeal of credit unions' tax-exempt status, DCUC, in a letter to the committee, urged the committee to question him on his stance and seek a public commitment that he will not pursue policies that would undermine credit unions' mission.
"Mr. Kies has a well-documented history of advocating for the elimination of credit unions’ tax-exempt status. As co-author of a report, he argued that credit unions “no longer have any policy oreconomic justification” for exemption and recommended that Congress revoke the exemption to 'level the playing field' with banks. He estimated that doing so could generate nearly $10 billion in additional federal revenue over five years. These comments—made in the context of long-standing efforts by the banking lobby to weaken credit unions—are deeply troubling, especially when weighed against the mission-driven nature and not-for-profit structure of credit unions," wrote DCUC Chief Advocacy Officer Jason Stverak.
DCUC emphasized that removing the CU tax break would significantly limit financial resources and services for military families, who already face unique financial challenges due to the military lifecycle.
As CUToday.info reported, just over ten years ago Kies co-authored a seven-page report for Deloitte that advocated the repeal of the federal tax-exempt status for credit unions of all sizes.
Kies, currently managing director of the Federal Policy Group, LLC, has also done consulting work for the American Bankers Association and has been outspoken on his position of favoring taxing credit unions.
The seven-page report, co-authored by Kies and Bert Ely, principal of Ely & Associates, states: “Unlike other financial institutions like banks and thrifts, credit unions do not pay corporate taxes on their income. This puts them at a competitive advantage relative to other financial institutions for tax reasons. Eliminating this exemption would raise revenue and level the playing field.
“Credit unions have grown to control a significant share of the market for banking services, particularly in retail banking. However, unlike their direct competitors—commercial banks and thrift institutions—credit unions do not pay corporate income taxes,” the report continues. “This huge tax expenditure—nearly ten billion dollars over the next five years, according to the Office of Management and Budget—no longer has any policy or economic justification. Credit unions have evolved to become large financial institutions which provide services that are identical to their taxpaying competitors. In order to level the competitive playing field in the banking industry, all credit unions should pay corporate income taxes.”
Other DCUC Actions
Additionally, DCUC strongly opposed Texas Senate Bills SB 2026 and SB 2056 in a letter to the Texas Senate Committee on Business and Commerce. DCUC warned that these bills would disrupt the current payment system, benefiting large retailers at the expense of consumers while reducing access to affordable credit for service members, veterans, and their families. DCUC urged lawmakers to reject these bills to prevent financial harm to military communities and instead work on alternative solutions that promote fair competition without jeopardizing financial security.