The credit unions tax status exists simply because they are not-for-proﬁts owned by the members of the credit union, wrote 2 Rivers Area CU President/CEO Danita Swanson in the Daily Journal recently. Responding to a letter questioning the credit union tax status, Swanson notes that Illinois credit unions and their members pay millions in taxes annually, and that any change to the credit union tax status would “double tax” members.
“I've been involved with credit unions for more than 40 years and have always heard the argument that credit unions have this unfair advantage because of their tax status. In all that time, though, I've never heard of a bank deciding it was such a competitive advantage that they became a credit union,” she wrote. “This is because the shareholders of for-proﬁt-banks want to make money on their investment, which is perfectly ﬁne for them.”
She also notes that Illinois banks, while controlling 92% of deposits in the state, saw a record $5.3 billion in net income and a record $2.7 billion in stockholder dividends in 2018.
“While we may offer a number of the same products as banks, our model and structure are very different, with owners benefiting from lower loan rates and fees that a credit union can offer because of its not-for-proﬁt, cooperative structure,” Swanson writes. “This is the reason for our tax status and you only have to talk to our members to ﬁnd out how this benefits the community we serve.”