Wednesday, April 18, 2012

Property Taxes and CU Managers Pay

The Star-Advertiser on April 16 ran a story on the lack of transparency regarding executive pay at the largest credit unions in Hawaii.

The story about executive pay has become entwined with the credit union industry's efforts to preserve its exemption from Oahu's property tax.

The article notes:

The secretive nature of management pay is raising questions at a time when the industry is lobbying to preserve one of its key public subsidies: an exemption from Oahu property taxes.

The 10 largest credit unions in Hawaii declined or did not respond to a Star-Advertiser request to voluntarily disclose compensation data for their five highest-paid executives.


All of Hawaii's credit unions are federally chartered. Federally chartered credit unions are not required to file Form 990s, like other tax exempt organizations. As a result, the pay package of top credit union management is not disclosed.

In addition, credit unions on Oahu are just not exempt from federal and state income taxes; but also exempt from property taxes. Regardless of the value of the property, credit unions only pay a minimum of $300 for each parcel they own. This amounts to real savings for credit unions.

Credit union advocates will contend that executive compensation and their exemption from property taxation are unrelated. I disagree. As tax exempt organizations, federal credit unions receive a valuable public subsidy and there is a need to ensure that this subsidy is going for its intended purpose and not excessive compensation.

Read the Star-Advertiser story (subscription required).

4 comments:

  1. Then excutives of Subchapter S banks should reveal their compensation. The exemption from federal corporate taxes is a valuable public subsidy as was the TARP investment in banks.

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  2. It is not a tax exemption, Subchapter S is a pass through entity. The tax is paid by the shareholders.

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    Replies
    1. It is an exemption. C corps pay corporate taxes and the shareholders pay dividend taxes. S corps only the shareholders pay taxes. There is no double taxation. Thus there is an exemption from federal corporate taxes.

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  3. I truly like to reading your post. Thank you so much for taking the time to share such a nice information.

    ReplyDelete