NAPERVILLE, Ill. (1/17/14)--Dan Plauda, president/CEO of the Illinois Credit Union League, hailed credit unions as a vital, locally owned financial services option for consumers in an op-ed piece that appeared in the Wednesday edition of The State-Journal Register.
"Every day, nearly 3 million Illinois residents are among 96 million Americans who count on their local credit union to reach their financial goals," Plauda wrote.
Plauda explained that as not-for-profit financial cooperatives, credit unions were first exempted from federal income taxes in 1917 explicitly to fulfill a special mission as valuable and affordable alternatives to for-profit banks to serve individuals with a common goal or interest.
Credit unions are owned and democratically controlled by their members, who together pool their funds to help each other, he wrote. After expenses and reserve requirements are met, net revenue is returned to members via lower loan and higher savings rates, and lower costs and fees for services.
"A credit union's goal is to serve all members well, including those of modest means--every member counts," Plauda wrote. "Credit unions exist solely for this reason, not to make a profit. Members know their credit union will be there for them in challenging times, as well as good times--which is the reason why they are so fiercely loyal."
Plauda also explained the credit union tax status. "Even though credit unions are exempt from income tax, they still are subject to, and pay, property, payroll and sales taxes, as well as a host of governmental regulatory supervision fees," Plauda wrote.
"Last year, credit unions returned financial benefits to their members of $6 billion--nearly four times that which would be realized by subjecting credit unions to taxes," he continued. "In other words, the full benefits of the tax exemption were passed on to members, and then some--primarily because credit unions do not have to pay dividends to stockholders."
To read the editorial, use the link.