Friday, May 24, 2013

Sub S Taxation Is Not the Same as CU Tax Exemption

In case you missed it, Tom Bengtson unloaded both barrels on an April 2013 article, "Banks and Credit Unions: Competition Not Going Away," appearing in the Federal Reserve Bank of St. Louis Regional Economist.

Bengtson writes that "[w]hile the article is generally an even-handed description of the competitive landscape for banks and credit unions, the authors veer off course in their description of the tax differences between banks and credit unions."

The paper stated that banks organized as S corporations and credit unions are similarly exempt from taxation.

Let's just say that this comparison got Tom Bengtson's goat.

"To suggest that a sub S bank and credit union have equal tax treatment is extremely misleading. From a practical perspective it is a lie and I don’t understand why two professionals at the Federal Reserve Bank of St. Louis would propagate such nonsense.

To suggest that sub S business owners (banks and otherwise) don’t pay federal income taxes is an insult to every sub S business owner out there, including your’s truly."
To read his commentary, click here.


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5 comments:

  1. AnonymousMay 24, 2013 at 9:20 AM

    Right. And even if true, there are only about 1000 S banks.
    Cuna has everyone brainwashed. Congress needs to pass up the campaign contributions and just tax us...it's clear we're not getting anything anyway and many of us are or have disaffiliated.

    ReplyDelete
  2. AnonymousMay 24, 2013 at 3:04 PM

    Both SubS banks and credit unions are exempt from federal CORPORATE income taxes. That is the point. All the owners of the banks and credit unions pay taxes on the dividends declared by the board of directors and paid by the corporation.

    ReplyDelete
  3. Keith LeggettMay 24, 2013 at 4:34 PM

    As a pass through entity, shareholders of S Corporations pay taxes on the earnings of the corporate entity whether dividends are paid.

    ReplyDelete
  4. AnonymousMay 24, 2013 at 6:15 PM

    Mr Leggett. Maybe the simpletons will understand this.
    Owners of sub s pay the same tax on deposits as members THEN pay tax on bank earnings which the bank passes thru to them.
    Which btw makes them a REAL owner.

    ReplyDelete
  5. AnonymousMay 25, 2013 at 8:43 AM

    Correct.
    Members are not owners and don't pay tax on earnings of credit union. They get paid a deposit rate just like a bank customer.
    Someday, credit unions will understand how much false and misleading information Cuna spews.
    All this talk of our members being owners.
    Hilarious.
    Go to the lobby and ask them about their ownership and videotape their reaction.

    ReplyDelete

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