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Thread: Don't Tax my Credit Union!

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    Veteran Member Artema's Avatar
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    Thumbs down Don't Tax my Credit Union!

    For anyone who uses a credit union, this may or may not be problematic. Commercial banks are claiming credit unions need to pay their fair share of taxes to 'level the playing field'. LOL even though credit unions are non-profit, they still pay that same amount of taxes for payroll, insurance, etc. Right? I think big banks (like CHASE), are noticing people like me who are sick of their corporate bullshit and decided to move to a credit union.

    I was looking up information on my bank online when I came across this campaign by the Credit Union National Advocacy http://www.donttaxmycreditunion.org/
    They also have a twitter and facebook page that's pretty active.

    I not 100% sure where I stand on this issue because right now it just seems to be a giant back and forth campaigning between credit unions and commercial banks. I need more info.




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    Banned Melonie's Avatar
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    Default Re: Don't Tax my Credit Union!

    this is from Congressional testimony ... via


    (snip)"in testimony before Congress, Sal Marranca, Independent Community Bankers of America chairman, made the case for repealing the tax exemption status that federal credit unions currently enjoy. From the chairman's testimony:

    The current tax exemption that credit unions enjoy is directly linked to their original mission of serving individuals of modest means. However, after decades of 'mission creep,' which has resulted in multi-billion-dollar credit unions, that tax exemption can no longer be justified.

    Marrana's comments come as the House Financial Services Subcommittee on Financial Institutions and Consumer Credit debates the Small Business Lending Enhancement Act, a piece of legislation designed to increase credit union lending power. The proposal would significantly increase a credit union's ability to approve larger loans for its members.

    Community banking institutions and credit unions may appear to be somewhat similar. Both of them tend to be more consumer-friendly, typically offering free checking programs and better interest rates than big banks. Consequently, the two also compete for like-minded account holders, consumers who prefer cost-effective banking to the bank fees that come with the convenience of thousands of ATMs and branches.

    However, Marranca's testimony highlights the crucial distinction between the two: profit versus not-for-profit. As the two types of institutions continue to work to attract new personal and small business accounts, it's fair to say that tax exemptions tilt the field in favor of credit unions. While community banks pay state and federal taxes each year, credit unions can put those dollars to use to offer more benefits, services and discounts to their account holders.

    I certainly understand Marranca's point of view. Community banks are in arguably the toughest position on the banking playing field. They're competing with one side that features some members who are too big to fail and another side that receives a tax advantage."(snip)


    The obvious take-aways seem to be ...

    Credit Unions are presently 'gifted' with tax exempt status. One viewpoint says this benefits Credit Union membership, which has traditionally been 'working class' individuals. The other viewpoint says that the tax exemption amounts to a 'stealth' US taxpayer funded subsidy that constitutes Unequal treatment under the law versus regional and national banks.

    The original 'mission' of Credit Unions ... mostly home mortgage loans and local access to basic banking services ... has gradually widened in scope to the point where some Credit Unions now offer everything from credit cards to investment services. As a result, the original US taxpayer funded subsidy for Credit Unions now arguably also subsidizes financial products and services offered by Credit Unions that directly compete with regional and national banks ... something which is contrary to the original intent of the laws that created the Credit Union tax exemption in the first place.

    The most recent round of controversy is the result of Credit Unions seeking legal authority to offer even more / even larger financial services ( example 'jumbo' mortgages ) ... which will further 'intrude' on the market niche presently served by regional and national banks. Regional bank interests don't appear to be opposing this increased competition, but they are definitely opposing 'stealth' US taxpayer subsidies for that competition which inherently places taxable regional banks at a cost basis disadvantage.

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