MADISON, Wis. (4/26/13)--The Illinois and Louisiana Credit Union Leagues and Alabama CU weighed in on the tax status battle to tell why credit unions are tax exempt in two publications Wednesday.
Illinois Credit Union League President/CEO Daniel Plauda, in an opinion-editorial in Wednesday's State Journal-Register, noted banking associations' media campaign to pursue taxing credit unions.
"Stripping credit unions of their tax-exempt status won't deliver the revenue Illinois needs," Plauda said. "Worse, such a move would pick the pockets of almost three million state residents who rely on credit unions to provide them with affordable financial services."
Credit unions are member-owned, democratically run financial cooperatives; they typically offer loans with lower interest rates than those at for-profit banks and pay higher interest on savings accounts, he said.
"As not-for-profit, member-owned entities, credit unions are exempt from federal and state income taxes," Plauda wrote, noting credit unions "pay property, sales and payroll taxes." All excess revenue is returned to the member through better rates and more affordable services. As new bank fees have proliferated, Americans "have moved to credit unions in droves." For the full article, use the link.
Banks are fighting credit union's tax-exempt status while forgetting about the growing sector of banks operating as Subchapter S organizations, said the Louisiana Credit Union League and Tuscaloosa Ala.-based Alabama CU in Wednesday's Credit Unions Online.com. Use the link to access the article.
Banks should examine their complaints and take the tax issue off the table, said Connie Major, Louisiana league executive vice president, noting Subchapter S organizations "aren't paying as much taxes either." Competition drives a healthy marketplace, Major said. She urged banks "to consider converting to a volunteer board. Credit unions and banks operate through an entirely different model where banks are for profit and have stock holders--we're just completely different from one another."
Banks bring up the tax issue virtually any time credit unions seek additional powers such as trying to raise their member business lending cap, said Alabama CU President/CEO Steve Swofford. "Banks believe that by threatening the loss of the tax exemption they can force credit unions to operate under laws passed over 50 years ago," he said, adding they use any federal or state government fiscal crisis as an opportunity to raise the issue. The amount of money that would result from taxing credit unions "is truly minimal."
Protecting credit unions' tax exempt status is the top priority of the Credit Union National Association. To help credit unions talk about the value of credit union membership and why credit unions are tax exempt, CUNA has created a Tax Status Advocacy Toolkit, which contains newsletter articles, radio and print ads, credit union data, state-level updates on tax issues, member communication pieces and more.
Members who understand the value of their membership will stand to defend the tax exemption of credit unions, maintains CUNA President/CEO Bill Cheney said. For more information, use the link.