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League CEOs letter to editor addresses tax issue
ALBANY, N.Y. (1/21/09)--A letter to the editor written by Credit Union Association of New York President/CEO William J. Mellin responds to an earlier letter that suggests taxing credit unions the same as banks. Mellin's letter was published Sunday in the Watertown Daily Times. It chides the original writer for not doing his research. Had he done so, said Mellin, "he would have known that credit unions do pay taxes, including property and employer taxes. They do not, as Buckingham states, 'operate without any tax liability whatsoever." Mellin outlines the credit union difference, noting that credit unions' exemption comes from their structure as non-for-profit financial cooperatives that return all earnings to their members in the form of dividends and enhanced services. "In contrast, banks are required to pay corporate income tax because they are in the business of returning profits to paid board members and outside stockbrokers, not their customers," Mellin wrote. "Every taxpayer benefits from the credit union presence in the marketplace--they help drive down costs and fees associated with banking," he said, before describing them as local, member-owned, democratically controlled organizations "that represent a distinct financial alternative that individuals elect to join." Mellin also points out that credit unions don't engage in subprime lending and rampant loan origination without regard to credit risk that is at the core of the current financial crisis. "In fact, the practices of credit unions should be viewed as a model for ensuring the financial safety of all Americans," he wrote. "Since their beginnings a hundred years ago, credit unions have weathered every financial storm since the Depression of the '30s without ever costing taxpayers a penny or compromising members' deposits. Credit unions are not part of today's financial problems, but they are playing a part in the solution," he concluded. For Mellin's entire letter, use the link.
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