Enactment of the Tax Cuts and Jobs Act (TCJA) made important and overdue reforms to both the individual and corporate side of the federal tax code. As a result, taxpayers are seeing bigger paychecks, businesses are accelerating capital investment, and the U.S. economy is firing on all cylinders. Rep. Kevin Brady, architect of the TCJA and Ways and Means Chairman, recently said that the new tax code is “simpler and fairer for Americans of all walks of life.” NTU shares this sentiment and thank Chairman Brady for his hard work on a more equitable tax code.
While the tax code is certainly fairer than it had previously been, there are still plenty of areas in the tax system that deserve periodic scrutiny (and possibly revision) to reflect changing realities of the economy. One such example is the tax “playing field” between banks and federally chartered credit unions. Bankshave taxpaying shareholders and are subject to federal corporate income tax whereas credit unions are exempt from such taxation and some lending regulations – but are required to restrict their membership to only those who share a common bond.
That is not inherently unfair, so long as these institutions are abiding by their mandated common bond regulation. The vast majority of credit unions with small asset holds are sticking to these rules; however, a growing number of policymakers and outside observers believe a few large credit unions may be stretching their advantages to compete directly with banks.