WASHINGTON (12/9/14, UPDATED 12:09 p.m. ET)--Retiring Sen. Tom Coburn (R-Okla.) today released a report he says "decodes" the U.S. tax code. In it he calls for the elimination of the credit union tax status, which applies to credit unions because of their cooperative, not-for-profit operating model.
Protecting the credit union tax status is a top priority of the Credit Union National Association. The group's leader Jim Nussle said of the Coburn report, "Sen. Coburn has had a distinguished career in the Senate, but I have to take issue with his view of the credit union tax status: He's just wrong and uninformed."
Nussle emphasized that Coburn's suggestion would impose a new and unjustified tax on the financial cooperatives.
In his statement Nussle went on to explain, "The tax status is based on the structure of credit unions--as not-for-profit, cooperatively owned, volunteer-led financial institutions. The tax status is not based on the products or services a credit union offers, or who belongs to the credit union."
Nussle warned that Coburn's report also reveals "little understanding of how credit unions differ from banks."
The CUNA leader noted that at a bank, the beneficiaries of the bank's services are the shareholders--who expect as much profit be returned to them as possible from the bank. At a credit union, the member-owners are the beneficiaries.
"Because of the cooperative ownership structure, any excess earnings of a credit union are redirected back to all members in the form of lower loan interest rates and higher savings yields. And credit unions deliver.
"CUNA's research shows credit union members in the year ended June 2014 realized financial benefits of nearly $6 billion, just by saving at, borrowing from or acquiring other financial services from their credit unions, rather than from a bank.
"And members appreciate what the credit union difference means to them: This year, for the seventh year in a row, credit unions were tops in 'customer satisfaction' among financial institutions, beating out the banks. Members/consumer get it about credit unions--and that's what really counts."