New book outlines recommendations for Congress, including eliminating the credit union tax exemption.
The American Enterprise Institute, a conservative think tank, is calling for the end of the federal income tax exemption that credit unions now receive.
“In addition to the major proposals, our reform would simplify the corporate tax base by eliminating business tax expenditures that subsidize specific economic activities,” AEI states, in a book titled American Renewal: A Conservative Plan to Strengthen the Social Contract and Save the Country’s Finances published earlier this month. “This includes the exemption for credit union income, tax credits for green energy investment and production, the tax credit for marginal wells, and the capital gains exclusion of small corporation stock.”
What’s in the Book?
The volume includes recommendations for the 118th Congress in areas ranging from childcare to health to a fiscal overhaul. It begins with an introduction written by former House Speaker Rep. Paul Ryan, R-Wisc., who is the book’s co-editor along with Angela Rachidi, a senior fellow at AEI.
“The policy recommendations laid out in this book, taken together, will grow federal spending more predictably and sustainably, which will stabilize our national debt at levels we can afford, modernize the dollar, demonstrate that we can deliver a health and retirement system free from near-term insolvency, and make those systems more reliable to those who count on them,” Ryan wrote in the introduction.
He added that federal fiscal policy is on a collision course with monetary policy and that the result will be “economic devastation resulting from a debt and currency crisis.”
The chapter on tax code changes was written by Kyle Pomerleau and Alex Brill, both senior fellows at the think tank.
They contend that the current tax code arbitrarily favors certain industries and legal forms of organization over others, and propose replacing the current tax treatment of businesses with a 15% cash flow tax on all businesses.
What Happens Next?
AEI was particularly influential during the George W. Bush Administration, when several staff members joined the administration. However, the group may not be sufficiently conservative for many right-leaning members of the House and Senate.
It also is not clear that the credit union proposal will gain much traction on Capitol Hill.
The last lawmaker to try to press the issue was former Senate Finance Committee Chairman Sen. Orrin Hatch, R-Utah, who questioned whether the tax exemption was outdated. However, Hatch retired from the Senate shortly after raising the issue.
For years, banking trade groups have been arguing that the tax exemption is outdated. They potentially have found an ally in the House—Rep. Randy Feenstra, R-Iowa, who pushed a credit union state tax bill while chairman of the Senate Ways and Means Committee in the Iowa legislature.
Feenstra is seeking a seat on the tax-writing House Ways and Means Committee in the next Congress.