You may have heard that the banks and some politicians in Washington, D.C. are considering an overhaul of the federal tax code, an overhaul that could hurt credit unions on a local and national level. They say the federal budget can be balanced by taxing credit unions, even though credit unions hold only 6% of all financial assets nationwide. Can you guess who holds the other 93%? You guessed it, banks.
Visit DontTaxMyCreditUnion.org and join the movement!
We’ve already seen a similar effort right here at home by the Oregon Bankers’ Association to introduce three bills to Oregon lawmakers in Salem aimed at limiting credit unions’ abilities to serve and save their members money.
As a member, you know that Unitus Community Credit Union is owned and directed by you. While credit unions are regulated by federal and state governments, they are also governed by a volunteer board of directors elected by its members. Unlike banks that maximize profits for a small group of stockholders, credit unions exist to serve their members, including working families, small businesses, and the local community. Because we return profits to our members, we are able to offer higher returns on savings, lower loan rates and low to no fees. That’s why your credit union is not-for-profit and tax exempt. A tax on credit unions is really just a tax on YOU, the member.
Video & Analysis
THE DIFFERENCE BETWEEN BANKS & CREDIT UNIONS
Credit Unions are structured differently and for a very good reason…to help working families and small businesses keep more of what they earn.
KNOW THE TRUTH
As a consumer, your voice is important. Credit unions are not-for-profit cooperatives and that means your membership saves you money in fees and loan rates. Tell Congress not to tax your credit union.
New ECONorthwest Analysis Debunks Bank Claims About Credit Unions
The big banks are lobbying for more taxes against credit unions. That could tax some credit unions out of existence, wiping out your choice to belong to a cooperative financial institution.That’s just wrong. Some very accomplished economists for ECONorthwest studied the credit union model, and their report debunks the bank myths. You can read the report here.
Northwest credit unions donate millions, volunteer thousands of hours, improve financial capability of students and adults, and make reasonable loans that help people start businesses and keep their homes and cars in tough times. You can read the report here.
TAKE ACTION NOW!
We ask that you:
- Educate yourself and others by watching the video and clicking the resource links on this page.
- Take Action by contacting & Tweeting your U.S. Representative and Senators in Congress. Visit www.DontTaxMyCreditUnion.org and tell them not to tax your credit union.
- Stay informed by downloading the Credit Union Advocacy App from the Apple App Store or Google Play.
- Share your story about how Unitus has helped you. Email us, post your story on our Facebook page, or tweet us by using hashtag #DontTaxMyCU.
- Don’t Tax My Credit Union (National Campaign)
- NWCUA Economic Report – Credit Unions vs. Banks: The Myth of the Uneven Playing Field
- NWCUA – Oregon Credit Unions: Community Investment Report
Get the answers to some of the most frequently asked questions about the ‘Don’t Tax My Credit Union’ movement.
What are Credit Unions?
Credit unions are not-for-profit financial cooperatives owned by their members and operated by a volunteer board of directors. Credit unions are formed for the purpose of serving and providing benefits to their members, especially to those of modest means.
Are Credit Unions Different From Banks?
Yes. Credit unions are not-for-profit and member owned. Banks are for-profit and owned by shareholders. Credit unions return profits back to their members in the form of lower than average loan rates, higher than average savings rates, lower fees, and many low or no-cost products and services. Conversely, banks return profits back to their shareholders in the form of dividends.
Do Credit Unions Pay Taxes?
Yes. Credit unions do pay taxes, including payroll, property and sales taxes. In 1937, however, credit unions were granted a federal income tax exemption because of their member-owned, cooperative structure and because they typically serve populations underserved by banks. Congress has repeatedly affirmed credit unions’ federal income tax exemption, noting they serve a unique “public good” to meet the financial needs of consumers, particularly those of “modest means.”
Does Credit Unions’ Income Tax Exempt Status Affect Unitus Members?
The federal income tax exemption enables Unitus to reinvest income back into low-cost products and services for members. Each dollar of income taxed would mean one less dollar Unitus and other credit unions could direct toward products and services that are more affordable than what for-profit banks provide.
Would ending credit unions’ income tax exemption harm the economy?
Yes. Credit unions play an in important role in the economy by typically serving those of modest means and small businesses underserved by banks. Taxing income would make it harder for credit unions to provide a low-cost banking option for millions of Americans, as well as reduce the lending options for small businesses in need of commercial loans banks are unwilling to provide. Additionally, Oregon credit unions returned $131 million back to consumers and the economy last year, an economic lift made possible in part by the current income tax exemption.
Should Credit Unions With More Than $1 Billion In Assets Be Taxed On Their Income?
Credit union income is tax exempt because credit unions are not-for-profit, member-owned financial cooperatives that serve a unique “public good.” This is true of all credit unions, large and small. Size does not change the core of what makes all credit unions different from banks and should not determine whether income is taxed.
What Can I Do To Help Protect Credit Unions From Being Taxed On Income?
Member advocacy to ensure congressional support is needed now more than ever. Efforts to enact tax reform legislation are gaining steam in Congress, and banks are pushing lawmakers to include in any related proposals a repeal of the credit union income tax exemption.
What’s Being Said by Banks
Banks: “Today, credit unions are a $1 trillion industry that pays no taxes.”
Credit Union Response: It’s important to note that credit unions do pay taxes, such as payroll, property and sales taxes. Only credit union income is tax exempt. That’s because Congress has long recognized the clear difference between credit unions and banks. Unlike banks, credit unions are not-for-profit and exist solely for the benefit of their respective members. Income is returned to members in the form of lower fees and higher rates of return on deposits. Banks, by contrast, are for-profit institutions and issue stock to make money for their shareholders, not their customers. Importantly, Congress has repeatedly affirmed that credit unions serve a unique “public good” to meet the financial needs of consumers, particularly those of “modest means.” (Source: Review of Credit Union Tax Exemption, Committee on Ways and Means, U.S. House of Representatives, One Hundred Ninth Congress).
Banks: “That’s nearly $2 BILLION every year that could help shrink the federal deficit.”
Credit Union Response: According to Congress’ Joint Committee on Taxation, however, taxing credit union income and jeopardizing billions worth of economic benefits would only raise $500 million in federal tax revenue. At the state level, Oregon officials estimate that removing our exemption would generate between $1 million and $4 million in state revenue per year. That figure pales in comparison to the $121 million that Oregon’s credit union members saved in direct benefits and invested back into the economy. On average, each credit union household saved $170 last year—money that members would have otherwise paid in higher bank fees.
Banks: “Now, credit unions want even more perks.”
Credit Union Response: (Currently, a credit union’s loans to businesses cannot exceed 12.25% of its assets, but the Credit Union National Association (CUNA) backs a bill reintroduced recently by Rep. Ed Royce, R-Calif., and Carolyn McCarthy, D-N.Y., that would raise the lending cap to 27.5%.) In the late 1990’s the bankers attempted to restrict our Field of Membership and prevent credit unions from literally opening any new accounts. That fight resulted in a trade-off that left us with the arbitrary cap of 12.5% of assets for Member Business Lending. No cap existed beforehand and the cap is ridiculous to be written into legislation. This type of restriction would generally be determined by a regulator if needed, not legislation. Our regulators support removing it!
Banks: “It’s time to end credit unions’ Indefensible and outdated special treatment.”
Credit Union Response: It is critical to our members and to us that credit unions remain a viable and healthy alternative to traditional banks. Banks focus on creating value for their stockholder, not the customer. Credit unions focus on creating value for our members, who benefit from consumer friendly created products and services that drive an average annual savings of approximately $170 a year for each credit union member.