Congress must pass tax reform this year, or taxes are going to go up for millions of individuals and businesses in America. To pass tax reform and extend the 2017 tax cuts, Congress must make some tough decisions and find ways to “pay for” extending those cuts. Their job will get even harder if they are going to include some of the president’s campaign promises, like taking taxes off tips or social security payments.

Every special interest group that currently enjoys a tax subsidy is panicking, including large, bank-like credit unions that already have little to no justification for their continued subsidy.

The credit union lobbyists are ratcheting up their political machine, but the political tactics they have relied on in the past don’t appear to be working in today’s hyper-partisan political environment. No one in D.C. believes for a minute that any voter will change a vote based on whether their multi-billion-dollar credit union can retain profits tax-free.

So they are getting desperate. The CEOs of the largest credit unions are pleading with their members to write their members of Congress to demand they preserve their multi-billion-dollar subsidy. But in today’s political environment, they are finding they have to “stretch” the truth a little to even get their members’ attention. 

First, they are telling members that this effort is being driven by the big banks. That’s flatly not true. If the credit unions are on the hot seat, it’s because of what they have done — growing and operating like banks! If anything, they put themselves in this predicament with their historic attempts to purchase banks last year. They can’t blame this one on us. 

Second, they are telling their members that the credit union will cease to exist if it has to pay taxes. What an outrageous claim! Are they really suggesting that paying taxes on their excess profits, the way every other cooperatively owned business does, would force them out of business? They are basically admitting that the only way they can compete is if the government tips the scales in their favor! Sorry, but that is just pathetic.

Third, they are telling their members they have to retain these profits to maintain their basic capital standards. Again, not true. Yes, they must maintain minimum capital standards (just like banks), but they are doing WAY more than the necessary minimum.

For example, I read a letter from a credit union CEO who has retained hundreds of millions in excess profits as part of an effort to buy a bank in a neighboring state last year. Do their members know they are paying higher loan rates for that? I doubt it. All in all, this seems like a pretty aggressive ask from a CEO of a $20 billion financial institution that has tripled in size in the last 10 years, who also refuses to disclose his salary to members or the public, like every other nonprofit in America.

And that might explain why way less than 1% of their members are answering their calls. In fact, several members have reached out to me after receiving these emails surprised to learn that their credit union doesn’t pay income taxes on their retained profits. They even offered to write letters encouraging Congress to take a closer look at the tax exemption.

Tax reform is going to be a huge lift for Congress this year, and it looks like it could get more interesting than even I would have predicted.