Bankers Declare War on Credit Unions’ Tax Exemption
September 26, 2013If you’ve been reading the Alliance’s Weekly Headlines over the past few months, you’ve noticed that, in almost every issue of our Thursday summary of news and editorial coverage, there is at least one article about commercial banks’ efforts to repeal credit unions’ long standing tax exemption. Most of these stories are from various banking industry and financial services trade publications, but thanks to the persistent efforts of the banks, coverage of the issue is creeping into the general business media. Check out this clip from the Fox Business News channel and you’ll get an idea how seriously the banks are taking this issue. The bankers’ message is simple: 1) Credit unions have grown well beyond their original mission of serving people of modest means who share a narrow common bond 2) Credit unions are using their exemption to gain an unfair competitive advantage in the market, especially over community banks 3) The $2 billion that the federal treasury would reap from taxing credit unions could be used to help fund much needed government programs Credit unions are using all of the arrows in their quiver – professional lobbying, grassroots advocacy, political contributions – to make sure that Members of Congress understand their position. The outcome of this debate may not have a direct impact on the fraternal exemption, but because the credit union and fraternal business models are so closely related, it’s important we carefully study each side’s arguments so that we might be better prepared to answer similar questions from public policymakers in the future. Here’s a laundry list of links to some recent articles on the issue for your review: Two articles from the ABA Motley Fool Bank Credit News American Banker You might want to pass these on to others in your office – as well as your field representatives and local chapter leaders – because, if the fraternal exemption makes it on the congressional radar screen, we’re going to need every able-bodied constituent ready to have his or her voice heard on the matter. In the meantime, here are some questions for you to ponder:
- Is your common bond – whether religious, ethnic, gender, or shared values – really “sticky?”
- Do your members know and understand your society’s common bond? Could they explain it to a member of Congress (or even their neighbor)?
- Are you prepared to document the value of your society’s exemption to taxpayers? Do you know what the value of your member benefits, community service activities, and financial contributions are relative to the amount of tax the organization would have paid on its insurance operations?
- Are your local chapters – the real differentiator of the fraternal model – fulfilling their mission of engaging members in meaningful community service activities and attracting new members to the organization?