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Our friends in the banking sector have a welcome message for
CUNA GAC participants. They’re planning
to take out this ad in Hill publications suggesting that if Congress is looking
for tax revenue, credit unions are the place to find it.
There are so many things wrong with this ad that it is hard
to know where to begin.
First, the bankers continue to willfully ignore why credit
unions are exempt from federal income tax.
It’s based on structure and mission, not powers or restriction. The Federal Credit Union Act and the credit
union tax status exist in separate parts of the law. The tax status is based on credit unions’
structure as not for profit cooperatives and their mission to promote thrift and
provide access to credit for provident purposes. If the banks want to convert to
not-for-profit status and structure themselves as one-member-one-vote credit
unions, they can get the tax status as well.
Americans would probably appreciate the banks dedicating themselves to
promoting thrift and providing access to credit using the cooperative principles!
Second, the bankers ignore that Congress also conveys a tax
preference on subchapter S banks. It is
pretty disingenuous for the banks to encourage Congress – and state
legislatures – to change the credit union tax status when thousands of banks
have very similar tax treatment. Take a
moment and check out this
website. Look at the section about advantages / disadvantages of S corp
status. Do you see where they list the
advantage to customers of S corps bank customers? Me either, it’s all about the bank stockholders. Credit unions return the tax status to their
members in the form of lower rates on loans, lower fees, higher returns on
deposits. Credit union members
benefit. And frankly, so do bank customers
because we know where there are credit unions in the market bank prices are
generally more competitive than where there are not credit unions.
Finally, have the banks completely forgotten about
2008? Seriously. Have they no regard or appreciation for the
extraordinary measures that the government went through in order to keep the
for-profit financial sector afloat during the financial crisis? The outlay of taxpayer money that was used to
bailout the banks is the equivalent of decades of the credit union tax status. Now, they’ll say that they paid most of the
money back but there is no disputing that the bank bailout during the financial
crisis certainly kept some banks around that would not otherwise be there. Who did that benefit? The shareholders.
Having said all that.
Let’s take a deep breath. The
bankers would like nothing more than for us to storm the hill and defend out
tax status. Don’t let this ad or the
banker tactics distract you on Capitol Hill this week. We have a strong agenda in Congress and
before federal regulators. We want to
improve the operating environment for you to serve your members. Let’s tell our story and not get drawn into
the battle the bankers want us to fight.
Ryan Donovan, Chief Advocacy Officer
Champion for the Credit Union Movement
Credit Union National Association is the most influential financial services trade association and the only national association that advocates on behalf of all of America's credit unions. We work tirelessly to protect your best interests in Washington and all 50 states. We fuel your professional growth at every level and champion the credit union story at every turn.
© 2017 Credit Union National Association
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© 2017 Credit Union National Association |
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