Credit unions took a stand against state bank associations this week over the credit union exemption from federal taxes.
“We are disheartened that the banks continue to use misinformation in their rhetoric against non-for-profit member-owned credit unions,” the National Association of Federally-Insured Credit Unions and the Credit Union National Association said in a letter to Senate Finance Committee Chairman Orrin Hatch, according to American Banker.
The response came after 52 state bankers’ associations sent their own letter to Hatch, encouraging him to continue his tough stance on the credit union federal tax exempt status.
“There is no reason why the largest credit unions, which act and look just like the taxpaying banks they compete with, should be completely free of income taxation,” the letter stated.
The bankers even went as far as to ask Hatch to adjust the credit union tax exemption: “We urge you not to let the status quo stop your committee from ending this outdated tax exemption,” their letter said.
In late January, Hatch sent a letter to National Credit Union Administration Chairman J. Mark McWatters over his worry “that the credit union industry is evolving in ways that take many credit unions further from their tax-exempt purpose.”
In addition, the bankers accused NCUA of acting as an industry advocate instead of a regulator at times, and pointed out that the number of credit unions with more than $1 billion in assets has “more than doubled in the past decade.”
“Although the credit union industry works to paint a picture of small financial institutions struggling to get by—and the overwhelming majority of credit unions fit into this category and should maintain their tax status—there is a separate class of credit unions that have moved from church basements to conglomerates,” said the letter.