Once again, the Banking Lobby is asking congress to repeal the Federal corporate income tax exemption for credit unions. As Congress considers comprehensive tax reform, big banks and others in Washington think it’s a good idea to tax credit unions. Banks see credit unions as competitors, while credit unions are anything but competition for banks. Unlike banks, credit unions operate under charters which limit their ability to raise capital and make business loans. The banks conveniently leave those restrictions and other credit union benefits out of their plea to congress.
Credit unions were created to provide financial services through a not-for-profit cooperative business model that is member-owned and member-controlled. These characteristics are the basis for the tax exemption. Early on in the history of credit unions, credit unions were granted tax exemptions because they were “organized and operated for mutual purposes (in which the organization’s members share in the profits and expenses) and without profits.” The tax exemption continues to exist today because credit unions still operate in this unique way. Credit unions return all excess income to members in the form of higher deposit rates, lower loan rates, and lower fees.
Why is it so important to retain the tax exemption for credit unions? The tax exemption, along with the requirements to put the members’ needs above profit, serve as the foundation for credit unions. All credit unions, including SAC, are not for profit. We don’t seek to make money to pay shareholders, like banks. As a matter of fact, the amount paid to shareholders is much larger than the taxes banks pay. Credit Unions seek to serve their members by using their excess income to lower loan rates, increase deposit rates, maintain lower fees, and provide flexibility to help our members through the tough times. In fact, for every $1 in new taxes on credit unions, the government would wipe out $10 in better rates and lower fees for consumers. A removal of the tax exemption would mean that credit unions would have to change the way we operate. We would have to become just like a bank in order to stay in business.
In order to correct the misinformation being promoted by the banks, credit unions and our supporters are launching “Don’t Tax My CU Tuesday” TODAY. We need your help in getting the word out via social media. If you have a Facebook or Twitter account, please see the posts below and share them with your friends.
If you tweet, please send a tweet telling Nebraska’s Congressional Representatives to keep the credit union tax exemption. Tag your Congressional and Senate Representatives in your tweets and use hashtag “#DontTaxMyCU.”
To learn even more, visit www.donttaxmycreditunion.org