PEWAUKEE, Wis. (8/16/11)--"There they go again," said Wisconsin Credit Union League President/CEO Brett Thompson, in a press release after the latest suggestion the Wisconsin Bankers Association (WBA) to eliminate credit unions' tax exempt status. That would "heap taxes on consumers," the league said. "Every couple of years, the WBA repeats the same false claims, meaningless numbers and intentional and flagrant mischaracterization of the law, apparently thinking that somehow that will make it true," he said. "But it's not true now, just like it wasn't the last time. Or the time before that," he added. The state banks recently sent a letter to Congress asking for increased taxes on Wisconsin consumers," he said, referring to their suggestion to eliminate credit unions' tax exemption. "The league exposed their hypocritical plea for what it was--another attempt to stamp out competition couched in feigned concern for the tax-burdened citizens they claim to want to help. Noting that eliminating credit unions' tax exemption would amount to adding a tax on Wisconsin citizens, he outlined two key points:
* The real savings for Wisconsin consumers. The additional taxes WBA says might be collected by taxing credit unions is dwarfed--nearly six times over--by the $203 million in savings credit unions deliver to members annually via lower loan rates, higher savings rates and lower and fewer fees. Credit unions save Wisconsin bank customers $66 million because competition helps keep bank fees and rates in line. More than 80 Wisconsin banks have a similar exemption from corporate income tax. The difference: Banks would have to pay twice that of credit unions, and credit unions return earnings to their members, while banks return profits to a few shareholders. * The real reasons credit unions exist. Nothing in state or federal law requires credit unions to serve primarily the poor. Wisconsin law says a credit union exists to "encourage thrift among its members, create a source of fair credit at a fair and reasonable cost, and provide an opportunity for its members to improve their economic and social conditions." The law does not limit by income who credit unions can serve but expects credit unions to serve all members regardless of income, the league said. Credit unions are taxed as they are because they are cooperatives that return earnings to all their members via more competitive pricing on financial services.
"In the recent past, banks took huge bailouts from taxpayers. Until they were stopped, many held billions of dollars of assets in other states to avoid paying their share of Wisconsin taxes," said Thompson. He pointed to a media report that one Wisconsin bank paid no state income tax from 2000 to 2009, although it booked $2.6 billion in profits during that period. A second bank paid less than 1% on its profits those years and was sold to a foreign corporation. It will be permitted to use the bank's losses from the 2008 recession to offset profits well into the future, he added. "That amounts to a shift of several million dollars a year from Wisconsin's tax coffers into the hands of investors in one of North America's biggest banks. To add insult to very serious injury, [it] has started laying off more than 400 Wisconsin workers while sending profits--untaxed--out of the country," he said. "It's time for the WBA to stop," Thompson said, inviting consumers to move their accounts to a credit union and urging them to go to www.asmarterchoice.org to find a credit union they could join.