Wisconsin consumers send message to lawmakers: Don't tax CUs

PEWAUKEE, Wis. (11/4/05)--Wisconsin consumers sent a loud, clear message to their congressional representatives this week: Don't alter the tax status of credit unions or consumers will lose the option to choose a financial institution whose focus is people, not profits.

Consumers, learning about yesterday's hearing by the House Ways & Means Committee to review credit unions' tax exemption, are contacting members of the delegation and protesting any changes.

For example, the e-mail box of Rep. Paul Ryan (R-Wis.), a member of the committee, was jammed by members of Wisconsin credit unions, who said a new tax on credit unions would tax them as depositors and member/owners of the credit unions, said the Wisconsin Credit Union League.

Consumers even took to task the CEO of the Wisconsin Bankers Association on the radio for the anti-consumer views he expressed on the issue. (See story entitled "Banker on public radio misleads consumers about CUs.")

"If new taxes were enacted on credit unions, they'd be hard-pressed to function normally," said Brett Thompson, league president/CEO. "Credit unions can't raise capital the way for-profit banks can, and rely solely on earnings to maintain and add services. Increased costs would trickle down, and members would see higher costs for services, and free or 'unprofitable' services like consumer education would be eliminated. Essentially, it'd be adding another tax on Wisconsin consumers--not good public policy," he said.

A tax under such restrictions "will render them essentially bank-like and completely destroy consumers' not-for-profit option for financials services," Thompson said.

"Banks have even suggested that only larger credit unions should be taxed," he said, "when in fact every credit union still returns its earnings to their members/owners regardless of size." All credit unions are still cooperatives and share four distinguishing features, he said:

  1. Purpose--to serve members;
  2. Governance--volunteer directors elected by members;
  3. Member benefits--earnings invested in members and the community; and
  4. Values--in people, not profits.

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Resource Links
Why Credit Unions Are Tax-Exempt
There's Nothing Like a Credit Union
Related stories: 2005 Hearing on CU Taxation


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