Lafayette Federal Credit Union (Kensington, MD) is targetting McLean, Virginia residents -- a wealthy suburb outside of Washington, D.C..
In an advertisement announcing the grand opening of its McLean service center, the credit union stated "McLean Residents We Are Your Credit Union."
The census tract, where the branch opened, has a median family income of $176,027, which has an upper income designation. In fact, the census tract's median family income is 166.22 percent of the median metropolitan statisitical area's family income.
The advertisement was promoting low rate jumbo mortgages. This is not a financial product tailored for people of modest means.
The credit union tax exemption is meant to help credit unions meet the financial needs of people of modest means. However, the truth is that the tax exemption is often diverted to wealthier individuals, who do not need a taxpayer subsidy.
This is clearly bad public policy.
There are 27 Sub S banks with assets of $2 billion or more. Is the federal corporate tax exemption for these banks good public policy? Good policy for the small number of the owners of these banks (probably more well off) to get that exemption of corporate taxes that regular banks' shareholders do not receive?
ReplyDeleteSub S banks are pass through entities for taxation purposes. That means the owners are required to pay taxes on the earnings of the bank. In fact, most businesses are structured as pass through entities where the tax is paid by the owners and not by the business. This is very different from CU tax treatment.
ReplyDeleteStockholder of Bank of America is not treated the same as stockholder of Beal Bank. BofA's profits are taxed twice (corporate and dividend @ individual rate). Beal's are only taxed once at individual rate as a Sub S. Is that equal treatment when both have same powers as a bank?
DeleteLow rate mortgage loans are not tailored for people of modest means? So what if they're jumbo loans? To quote Hillary Clinton, what possible difference does it make? If Kensington FCU is offering low-rate mortgages to middle class people, then what's the problem? Your comment makes no common sense.
ReplyDelete