WASHINGTON (5/30/13)--What can one credit union do to support the Credit Union National Association's national "Don't Tax My Credit Union" grassroots campaign? Mountain CU of Asheville, N.C. got its local ABC affiliate, Channel 13 News, to do a "Reality Check" segment that highlights the credit union difference and how it could be destroyed if credit unions were to lose their current tax status.
"Why don't credit unions pay taxes?" Reality Check host Frank Fraboni is asked to explain.
"Right now they are exempt from state and federal income taxes," Fraboni clarifies, and that's because "they are not-for-profit financial institutions. They were started to serve lower income and modest working class families that ordinary banks wouldn't serve. Now they worry the member-owned institutions could be in jeopardy."
Without the cost of taxes, the piece says, "credit unions can pass the savings on to members." It goes on to note that budget deficits and tax reform discussions have state and federal officials possibly considering credit unions for "additional funding," with possibly devastating effects.
Mountain's CEO, Patty Idol, explains on camera that without the current tax status, the incentive to remain as not-for-profit financial institutions diminishes. She said big credit unions might convert to for-profit bank charters and small credit union might have to consider liquidation.
"We'd be back to where everything is driven by profits instead of serving our members," Idol says.
"That wouldn't be good for me," says one long-time member. "(Credit unions) are just easier to deal with," says another.
Fraboni said, "For many the credit union is a source of financial support unavailable at traditional banks."
When a third member declares on screen that he is "not happy" about the prospect of taxing credit unions, but "there's nothing you can do about it," Reality Check host Fraboni says credit unions believe there is something you can do about it: Contact your lawmakers and let them know how you feel.
Fraboni wraps up by telling viewers they can get more information on the Don't Tax My Credit Union campaign on the station's website. News Now readers can use the link below.