Forbes op-ed: Banks 'trying to mug' CUs with higher taxes
WASHINGTON (5/29/15)--Under the headline "Credit Unions, Taxes, and Dishonest Bankers," Ryan Ellis wrote in Forbes that banks' attacks on the credit union tax status aren't "about fairness, or tax reform, or even good public policy."
"It’s about one industry player trying to mug a competitor with higher taxes," Ellis penned in a Forbes op-ed that ran Thursday. Ellis is the federal tax policy director for Americans for Tax Reform, a group that says it opposes any tax increase.
He went on to say banks are not interested in tax reform: "They are interested in higher taxes on their competitors in order to gain a market advantage." He said if the government were to increase taxes on credit unions, the amount of tax revenue it would generate would be "chump change in Washington." However, he said it would be sufficient to "alter the balance of power in the financial industry."
The op-ed piece describes credit unions and banks as having "inverse" business models that dictate their tax structures.
As not-for-profit entities, credit unions "are obligated to plow their earnings right back into their customer (‘members’) pockets." Those members pay taxes on the higher interest their credit union pays, or deducts interest payments according to the lower loan rates charged.
Banks pay taxes on the "entity" level. But, Ellis notes, not all banks do: "One-third of banks are organized as S-corporations, and also do not pay taxes on the entity level."