HOUSTON (8/20/13)--While Congress debates tax reform, Credit Union National Association Chairman Pat Wesenberg and an Illinois credit union have written opinion-editorials in Texas and Illinois publications pointing out why credit unions should keep their tax-exempt status.
Wesenberg, who is also president/CEO of Central City CU in Marshfield, Wis., pointed out that credit unions look out for the interest of hard-working Americans in her column, entitled "Tax reform should put consumers first--not banks" in Houston's Memorial Examiner (July 31). She wrote a similar guest column on the issue in New Jersey's Star Ledger (News Now July 19).
Credit unions' federal tax exemption is based on their structure as cooperatives, not their asset size, Dennis Schaefer, president/CEO of SIU CU, Carbondale, Ill., wrote in an op-ed for TheSouthern.com (Aug. 13) , in response to a guest opinion by a banker, Martin Rowe of Legence Bank.
"Mr. Rowe raised an old and tired argument that credit unions have 'vastly outgrown their special treatment,'" wrote Schaefer. "The problem with that argument is the growth limitation banks seek to impose on credit unions is nowhere found in the law that regulates them.
"The structure of the credit union, not its size, is the reason it receives its tax-exempt status," he added. "Credit unions are exempt from income tax because of their cooperative structure, but still pay property (just like your neighbor on his home), payroll, and sales taxes and regulatory fees."
Banks hold 92% of financial institution deposits in Illinois. To avoid federal income tax, nearly one out of three banks in the state elects Subchapter S status, Schaefer wrote. "Those banks also pay stockholder dividends and director fees far in excess of the estimated federal income tax credit unions would pay," he added. "It is disingenuous for the banks to complain about the lack of a level playing field.
If they truly thought credit unions had unfair competitive advantages, banks would restructure to credit unions, Schaefer wrote. "None of them do because that would expose them to democratic ownership and control, and a far more restrictive regulatory regime, including higher capital standards," Schaefer concluded.
Removing barriers and raising awareness are two components of CUNA's and the state leagues' Unite for Good campaign, which, along with fostering service excellent, aims to move toward a strategic vision where Americans choose credit unions as their best financial partner. For more information, and to read the op-eds, use the links.