The tax reform currently in action at the hands of congressional lawmakers is causing an all-out war between banks and credit unions. The American Bankers Association began advertising its anti-credit union message throughout Washington, and last month ABA executives wrote letters to President Barack Obama and Congress. The issue is whether or not long time tax-exempt credit unions should continue to hold their federal tax exempt status. The ABA claims credit unions offer the same products as banks, therefore should pay the same taxes as banks. They also state that the tax-exempt status costs taxpayers $2 billion dollar a year.
In truth, banks are treated like any other profit making enterprise (and therefore are taxed accordingly), while credit unions are member owned and pay no federal taxes. This is because credit unions invest their profits back into their banking services by offering higher interest rates on deposit accounts and lower rates on loans – something the average banking institution cannot compete with. Banks say credit unions have been snatching customers because of the consumer frustration over rising fees and outrage, though in truth credit unions have grown only a tenth of a percent in America’s financial assets (totaling 2.1%) in the last ten years (The typical credit union has $4 million in assets, while the average bank holds $250 million). The American bankers association also fails to mention that for every dollar in new taxes the government might gain in federal taxes from credit unions, it would be eliminating $10 of credit union member benefits. That seems quite disheartening, considering credit unions started as a means to help meager income families, small businesses and seniors on fixed income who have been traditionally underserved and rejected by banks. As Chuck Albrecht (CEO/President of MMFCU) puts it, “Our not-for-profit status ensures that we can continue to focus single-mindedly on delivering value for our members.”
Credit unions are standing united. Don’t Tax My Credit Union is a national campaign dedicated to ensuring Congress doesn’t raise taxes on 96 million credit union members nationwide and preserves financial choice for American consumers. You can make a difference- start protecting your credit union today! Personally tell our elected officials at both the state and federal levels about the importance of credit unions’ not-for-profit status to ensure they stay that way! Click here to get started: http://www.donttaxmycreditunion.org/