WASHINGTON (9/24/13)--John Magill, the Credit Union National Association's executive vice president of governmental affairs, offers strong responses to questions being circulated by banks on Capitol Hill about the credit union tax exemption, in CUNA's latest "Inside Exchange" video.
In his wide-ranging conversation with Paul Gentile, CUNA executive vice president of strategic communications and engagement, Magill specifically debunks the four questions bankers are throwing at congressional offices. Importantly, Magill notes that the bank arguments are the same tired, hackneyed points they have unsuccessfully posed for years.
When banks ask whether credit unions deserve their tax status when they offer similar products to those offered by banks, they are trying to confuse the issue, Magill points out.
The credit union exemption from federal income tax, Magill reminds, is determined by the credit union cooperative structure, not by the services and products they offer.
"Banks are for-profit. Their earnings go to shareholders," Magill notes. Credit unions return their profits to their members, and that is why they earn their not-for-profit tax status.
When banks ask why credit unions retain their cooperative tax status when mutual savings banks lost theirs years ago, Magill says the banks are mixing "apples and oranges."
Mutual savings banks lost their tax exemption, he says, because they stopped democratically electing their boards of directors. Credit unions continue those democratic elections.
Magill also notes that the banks try to plant an idea that credit unions are mandated to serve only certain segments of the population.
"We are mandated to serve all persons. And we are particularly serving the hard-working Americans out there," Magill underscores.
He also notes that banks are circulating a fourth question about the credit union tax status to lawmakers--one credit unions may find particularly incredulous: Are credit unions saying they can't compete and won't survive without a government handout?
"That's rich coming from the banks who have just over the last few years accepted $30 billion in TARP and related assistance," Magill says. The Troubled Asset Relief Program--or TARP--was the government bailout of banks launched in 2008 in response to the subprime mortgage crisis.
Listen to the embedded video for much more on this "Inside Exchange" topic.