Tax legislative outlook for the 108th Congress

New Congress

The 2002 mid-term elections reversed a historical trend. For the first time in over half a century, a sitting first-term President's party gained seats in both the House of Representatives and the Senate, regaining control of the Senate and slightly increasing the majority in the House.

The First Session of the 108th Congress began last month with narrow Republican majorities:

House

229 Republicans

205 Democrats

1 Independent

Senate

51 Republicans

48 Democrats

1 Independent

Recent indications suggest that the 108th Congress will begin with an aggressive agenda.

Favorable Provisions

During the 107th Congress, CUNA, with help from the leagues and credit unions, successfully lobbied for enactment of pension and retirement reform legislation that included a number of provisions favorable to credit unions.

The 108th Congress offers credit unions an opportunity to put forth legislative proposals of particular interest to credit unions. CUNA invites you to send your ideas as we develop our legislative agenda.

New Legislative Agenda

Several tax issues of interest to credit unions may be addressed this year.

For example, early indications suggest that the 108th Congress may act to enhance retirement savings, which continues to be a priority for CUNA and credit unions.

We are also interested in a proposal under consideration that would create tax-deferred savings accounts for farmers.

President's Tax Package

Recently, the Administration put forth its tax package for Fiscal Year 2004 (which begins October 1, 2003).

The package would, among other items:

* Accelerate the 2001 tax-cut package retroactive to this year;

* End the double taxation of dividends, and;

* Create a new retirement savings structure.

The President's tax package may be significantly modified as it moves through the tax writing process. For example, Reps. Rob Portman (R-Ohio) and Ben Cardin (D-Md.) plan to introduce legislation that is expected to have strong bipartisan support.

Tax Writers

Article I, Section 7, of the U.S. Constitution provides that tax bills must "originate in the House of Representatives; but the Senate may propose or concur with Amendments."

Tax legislation is usually written in the tax committees. House Ways & Means Committee Chairman Bill Thomas (R-Calif.) and Senate Finance Committee Chairman Chuck Grassley (R-Iowa) have indicated their interest in taking up certain proposals that were not included in the President's package.

Your Ideas Needed

The tax-writing committees are expected to begin working in earnest on the tax bill within the next month as part of the budget reconciliation process.

This presents an opportunity to offer legislative proposals of interest to credit unions.

We invite your ideas for inclusion in the tax bill. Please send your suggestions to me. CUNA will keep you informed of any developments.

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Government Affairs

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Government Affairs

www.cuna.org

Please send your comments and suggestions for federal tax legislation to:

J. Leon Peace, Jr. lpeace@cuna.coop 1-800-356-9655, ext. 6724

By J. Leon Peace, Jr.

CUNA Manager of Tax, Pensions dr Housing

Copyright Credit Union National Association, Inc. Feb 18, 2003
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