Don't Tax My Credit Union

Big banks spent years buying up their smaller rivals to achieve greater market share. Then, having been deemed “too big to fail,” they greedily sopped up billions of dollars in government support during the last recession, while reducing lending to consumers and small businesses. And now, big banks are asking Congress to impose taxes on the tiny rivals that are still left — the credit unions.

With Congress returning to Washington early next week, CUNA and the state leagues have refocused their national grassroots efforts on tax reform, News Now reports.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways & Means Committee Chairman Dave Camp (R-Mich.) remain committed to comprehensive tax reform, having spent the August recess touring the country in support of tax reform. They hope to have legislation drafted by late September.

This week in Politico, a food fight broke out with banks tossing some volleys at credit unions. The banks claim that credit unions are the beneficiaries of unfair tax treatment, and that this tax treatment should be eliminated as part of comprehensive tax reform. Are they correct?

How are credit unions taxed? Credit unions, unlike banks, are not set up as for-profit entities.

More than one in four Coloradans is a member of a credit union, the major alternative to commercial banks. They’ve had that choice for more than 80 years, since the Rio Grande Operating Credit Union, the oldest in our state, opened its doors in June 1931.

The roar of frustration with banks may seem like it’s quieting, but a new survey suggests consumers are continuing to question their allegiances to their banking institutions. More of those consumers are turning to credit unions for their personal finance needs.

According to the 2013-2014 National Member and Nonmember Survey from the Credit Union National Association, 57 percent of credit union members indicate they are extremely likely to recommend their credit union to friends.

With the suggestion box now clamped shut for the Senate Finance Committee’s tax reform project, it bears pondering what the process is likely to mean for the future of credit unions’ tax exemption.

Local Middle Tennessee credit unions have a strong message for Congress: “Don’t tax us”, though banks are lobbying for officials to make a change.

“If we had to pay taxes that would change the way we do business and it would also do away with the choice people have in financial institutions,” Old Hickory Credit Union President and CEO Bonnette Dawson said.

With deficit reduction firmly on the minds of politicians in Washington these days, some in Congress are now talking about a blank-slate approach that would force a review of every tax deduction and potentially bring about tax reform. One recent suggestion is that tax exemptions for credit unions should be ended and could not survive such a review. However, the benefits provided by credit unions to consumers far exceed the taxes foregone from the tax exemption.

Twitter was abuzz Tuesday morning with credit unions voicing their support of CUNA’s Don’t Tax Tuesday.

The trade association has asked its members and affiliated leagues to tweet about the credit union tax exemption and add the hashtag #DontTaxMyCU and #DontTaxTuesday to provide a boost to its current Don’t Tax My CU campaign.

The House Ways and Means Committee is considering a move that would do away with tax exemptions to credit unions. They’ve been exempted from paying taxes for 70 years. Credit Union reps say if taxation comes to fruition, it effectively puts them out of business.

Mike Lanotte, of the Credit Union Association of NYS, says the mission of credit unions, to serve members in certain organizations, who work for specific employers, or live in certain communities, has never changed.