By Kenneth O’Connor
The credit union mission has always been to ensure secure financial choices at lower costs for their members, but a change in tax laws could greatly hamper that effort unless CU members let their voices be heard.
As a result, the CUNA led #DontTaxMyCU campaign turned heads on a national level, and successfully reminded congressional law makers of the many Americans that love their Credit Union!
Congress is back in session but has not yet changed any laws, giving more time for Credit Union members to contact their representative to support their preferred financial choice, like this tweet for Senator Sherrod Brown of Ohio.
If this is all news to you, great! All the buzz surrounding #DontTaxMyCU is attracting attention from the millions of hard working middle class Americans in need of a financial services alternative. Here is what you need to know.
What is special about Credit Union tax status?
- Credit unions first earned their tax-exempt status in 1934 with the passage of the Federal Credit Union Act. The act granted the exemption because “credit unions are mutual or cooperative organizations operated entirely by and for their members.” They are eligible for tax-exempt status if they operate on a not-for-profit basis, are organized without capital stock and operate for mutual purposes.
- A $10 Billion Dollar Subsidy, over 5 years? Interesting statistics have been brought up, including an estimate that the Credit Union tax exempt status is worth $10 billion over the next five years. While this annual $2 Billion over five years is sizable, it is not comparable to the estimated $83 billion in annual direct and indirect subsidies received by the 10 most dominant US banks. “To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.” say the editors at Bloomberg.
- A little subsidy that goes a long way: Credit Unions serve roughly 96 million members and while that accounts for some 40% of US adults, they only account for about 6% of total assets within the financial services sector. Credit Unions have been the go-to financial services provider for millions of Americans, especially for middle class families and communities under threat of being “underbanked” without support. Maintaining the tax exemption enables the Credit Union model’s continued expansion to accommodate lower income depositors with customer service that was traditionally provided by banks towards VIP high-net-worth individuals, but is now available to everyone through utilization of new technology, a vision articulated as necessary in a recent Atlantic Magazine article.
- Credit Union members are legion!
“Credit unions rely on service and value to differentiate themselves and each of their members can feel the difference. Paying taxes would diminish the credit unions’ ability to deliver the same level of value…” notes Alice Stevens, COO of First Financial Federal Credit Union of Wall, NJ and cuStudentloans CUSO Chairperson. She is not alone in such observations.
You can take action too:
- Go to Donttaxmycreditunion.org and send notice to your representative that you want Credit Unions preserved as a viable financial services choice.
- Follow on Twitter @CUNAAdvocacy for the latest updates on #DontTaxMyCU
- Like on Facebook: Show your support and share with your friends!
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