MADISON, Wis. (4/16/13)--League presidents in Louisiana, Oregon and New York took to the media to defend credit unions' tax exemption or urge Congress to raise credit unions' member business lending (MBL) cap. Both are key issues on the Credit Union National Association's legislative priority list.
Credit unions do pay their taxes, said Louisiana Credit Union League President/CEO Anne Cochran, in a Sunday letter in The Advocate responding to a Louisiana Bankers Association attack on credit unions' tax-exempt status.
"Banks struggle with the reasoning behind why credit unions are tax-exempt," Cochran wrote. "Credit unions do pay federal, state and local taxes as any business, such as employment and property taxes. Credit unions are exempt from paying corporate income taxes because earnings are returned to their members, who are taxpayers themselves. They are not shareholders in for-profit businesses like banks.
"Additionally, credit unions are regulated extensively by state and federal government," she continued. "We follow many of the same guidelines as bankers do. Unlike banks, credit unions always have and always will exist to help people, not make a profit. We give back in ways that bankers don't," she said, adding that members enjoy lower loan rates, higher savings rates and superior service.
Troy Stang, president/CEO of the Northwest Credit Union Association, wrote in the Portland (Ore.) Tribune Thursday, "Bankers bristle at the realization that a not-for-profit financial alternative remains an important buffer for consumers to the high fees, higher loan rates and lower return on savings that are cornerstones of the banking industry's for-profit model."
"While credit unions continue to focus on serving their communities, the Oregon Bankers Association has joined its national Wall Street counterparts in trying to stifle credit unions," Stang said, noting banks control more than 90% of all assets in the U.S.
"The bank lobby is the man-behind-the-curtain introducing legislation to impose additional taxes and regulatory burdens on credit unions," Stang said. "They want to saddle credit unions with regulatory burdens such as paperwork itemizing the very civic and community investments that have benefited credit union members for decades."
He also noted that "it is the structure, not the size of credit unions, that makes them different. Profit-hungry banks are structured to generate payments to stockholders. Not-for-profit credit unions exist for one purpose: to provide value to their members."
Credit Union Association of New York President/CEO Bill Mellin and CUNA Executive Vice President of Governmental Affairs John Magill were interviewed in The Street Thursday about credit unions' seeking an increase in the MBL cap to 27.5% of assets from 12.25% . They noted that raising the MBL cap would create jobs and provide lending opportunities for small businesses without costing the taxpayer a dime. CUNA estimates 158,000 new jobs and $14.5 billion in small business loans could be generated by raising the cap.
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