Ways and Means Committee Considering Comprehensive Tax Reform
February 7, 2013
February 7, 2013
A House Ways and Means Committee hearing next week will examine itemized charitable deductions, part of an in-depth look by the committee at comprehensive tax reform that also includes a financial products discussion draft released last month by Committee Chairman Dave Camp.
Preserving the credit union tax status remains a top priority for the Northwest Credit Union Association (NWCUA) and for CUNA.
“Many more bills will be introduced in the coming weeks and months to address the budget deficit,” said NWCUA Vice President of Legislative Advocacy Jennifer Wagner, “and at the end of the day, we will almost certainly see comprehensive tax reform legislation. We feel confident about defending our tax exemption, but that doesn’t mean we won’t have to fight for it.”
According to Ryan Donovan, Credit Union National Association (CUNA) senior vice president of legislative affairs, the credit union tax exemption is not expected “to be any part of the focus at this upcoming hearing,” but said that “it could shed light on how the committee intends to evaluate tax provisions going forward.”
House Ways and Means Chairman Dave Camp (R-Mich.) announced the hearing will take place on Thursday, Feb. 14, at 6:30 a.m. (PT).
Camp also released a financial products discussion draft on Jan. 24 as part of the committee’s broad attempt at comprehensive tax reform. According to a press release issued by the committee, the proposal seeks to modernize tax rules so as to minimize Wall Street’s ability to hide and disguise potentially significant risks through the abuse of derivatives and other novel financial products—an activity it cites as a contributing factor to the 2008 financial crisis.
The discussion draft also outlines changes to tax rules designed to provide greater simplicity and uniformity.
“The U.S. is a leader in the financial world, but our broken and antiquated tax code has failed to keep up with the rapid pace of financial innovation on Wall Street,” Camp said. “The lack of consistent and comprehensive tax policy has also contributed to some corporate scandals and the recent financial crisis that devastated our economy and threatened our standing in the global community. Updating these tax rules to reflect modern developments in financial products will make the code simpler, fairer and more transparent for taxpayers, and it will also help to minimize the potential for abuse that has occurred in the past.”
The Ways and Means Committee held 20 separate hearings on comprehensive tax reform in the 112th Congress and released an international tax reform discussion draft in October 2011.
“If we are to enact tax reform that preserves needed flexibility in the financial markets while ensuring that no one is gaming the system and putting hardworking taxpayers at risk,” Camp said, “then we will need the expertise of those who are most familiar with these products. They can identify areas that merit additional attention, and their insight is critical.”
The discussion draft consolidates several reforms that have been identified as necessary to provide more uniform tax treatment of financial products. Specifically, the discussion draft includes six proposals to:
- Provide uniform tax treatment of financial derivatives;
- Simplify business hedging tax rules;
- Eliminate “phantom” tax resulting from debt restructurings;
- Harmonize the tax treatment of bonds traded at a discount or premium on the secondary market;
- Increase the accuracy of determining gains and losses on sales of securities; and
- Prevent the harvesting of tax losses on securities.
An overview of the discussion draft along with a detailed summary can be found on the Ways and Means website. Comments on the financial products discussion draft can be emailed to Tax.Reform@mail.house.gov.
Washington Credit Union Day at the Capitol
More than 100 credit union advocates are in Olympia, Wash., today, sharing the credit union difference with legislators and discussing issies critical to the Association’s legislative agenda. Meanwhile, financial literacy outreach is in action right nearby, with local high school students taking part in a Financial Reality Fair on the Capitol campus.
Stay tuned to the NWCUA’s Facebook page for real-time updates and photos of credit union advocates in action.
Questions? Contact a member of the Association’s Legislative Affairs team: