Corporate tax inversions like Burger King’s and Medtronic’s -- in which U.S. companies incorporate offshore to avoid some U.S. taxes -- are much in the news and attracting policymakers’ attention. So why, ABA President and CEO Frank Keating asked in an American Banker op-ed yesterday, have policymakers paid so little attention to credit unions, “an entire industry that has been quietly -- and legally -- avoiding taxes for eight decades?”
“In fact, credit unions' tax loophole costs taxpayers as much as inversions do: $2 billion per year,” Keating wrote. “If inversions are controversial, so too should be the subversion of the historic basis for credit union tax exemptions.”
The brouhaha over inversions highlights the need for comprehensive, pro-competitive corporate tax reform, he argued -- which should close loopholes for credit unions. “Companies should be free to grow their businesses on their own terms, and they should then pay straightforward taxes on their profits,” he said.
Read the op-ed.
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While we're at it, why not eliminate the tax exemption for trade associations? I wonder how much that loophole is costing taxpayers. The ABA seems to be quite profitable, and seeing how they can afford to compensate their CEO in excess of $1.9 million per year, it only seems fair that they should pay taxes. It doesn't seem very patriotic that they would hide behind a 501(c)(6) status. Your hypocrisy never ceases to amaze me.
ReplyDeleteAnd let banks lose their Sub S tax preferences at the corporate level also. Credit unions have never complained when a bank switched from a C corp to an S corp.
ReplyDeleteOMG! Give the Sub S stuff a rest. You clearly don't have a clue what you're talking about.
DeleteCredit unions never complained bc cuna was too busy whining about all the bank powers credit unions want but wont get UNTIL they pay fed taxes.
DeleteWake up.
And smell the annual income of cuna ceo"s.
Look in the mirror and repeat after me,,"until i stop wasting member money on cuna and join those who have done so, im part of the problem".
Some of us do not support the national trade associations. But are smart enough to know the benefits enjoyed by both sets of FIs.
DeleteA 1999 Consumer Action study indicated that the Sub S tax break for banks equaled about 1/3 the total CU tax exemption. ABA states it believes the CU exemption to be about $2 billion a year. Then the Sub S is roughly $700 million. Let's just be fair and stop making personal attacks.
I'm sorry to sound personal. It's very frustrating. Any company (or individual) is trying to limit their tax expense as much as possible, and I understand credit unions want to avoid taxes. In the Sub S argument, the difference is that taxes ARE paid on Sub S corporation, but by the shareholders instead of the bank. However the bank typically reimburses the shareholder for the tax, otherwise they would have no shareholders.
DeleteHere's IRS's statement: S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.
To qualify for S corporation status, the corporation must meet the following requirements:
Be a domestic corporation
Have only allowable shareholders
including individuals, certain trusts, and estates and
may not include partnerships, corporations or non-resident alien shareholders
Have no more than 100 shareholders
Have only one class of stock
Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).
This correct and certain credit union people (Cuna) have no desire to explain this correctly so they perpetuate the myth...
DeleteWhy?
Because they have no answer for credit union's real needs like MBL relief or access to capital..so they do what other weak regimes do..in order to hold on to THEIR cushy deal...they point to a supposed enemy and say " see them, they're OUR problem."
Even if it means lying.
Let's just tax them all evenly--banks, credit unions, no corporate tax inversions--no more loopholes
ReplyDeleteNow you're talking.
DeleteAnd may the best management teams win.
Full taxes must equal full powers for all institutions.
Deletecorrect, agree. it would only be fair. full taxes, full powers.
Delete