Don't Tax My CU
Since its inception in 1934, the Federal Credit Union Act (FCUA) has given a tax exemption to credit unions that were “mutual or cooperative organizations operated entirely by and for their members".
Although credit unions pay many taxes and fees, including payroll and property taxes, critics argue credit unions today are no different than banks. However, the defining characteristics of a credit union, no matter what the size, remain the same today as they did in 1934:
- Credit Unions are not-for-profit cooperatives that serve defined fields of membership.
- Credit Unions have volunteer boards of directors.
- Credit Unions cannot issue capital stock.
If credit unions such as Bellco are taxed, over time there will be many consequences for 96 million credit union members. Possible outcomes include:
Credit Unions Lose Their Identity. By necessity, credit unions would have to increase profits and customer service would likely suffer.
Increased Rates and Fees. If the tax exemption is repealed, it would adversely impact savings and borrowing rates as well as increase member fees.
Difficulty Raising Capital. Further restraint on the ability to raise capital potentially impacts safety and soundness.
Erosion of Volunteer Base. If credit unions become "more like banks," the self-help, volunteer characteristic of credit unions and the community as a whole, would become less distinct.
How You Can Help
The Credit Union National Association (CUNA) is launching a new campaign to protect its members’ federal tax-exempt status. Their “Don’t Tax My Credit Union” effort gives members an opportunity to lobby Congress to preserve the federal tax exemption that credit unions enjoy. The lobbying process is simple and the letter to your legislator is already written. To make your voice heard, go to http://www.donttaxmycreditunion.org/take-action/ today!