Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, a senior fellow at the Manhattan Institute and an adjunct professor at George Washington University, wrote in U.S. News and World Report that tax reform should include ending the credit union industry's outdated tax exemption.
Furchtgott-Roth wrote that the credit union tax exemption does not make sense, since one principle of taxation is that similar businesses should be taxed the same.
Furchtgott-Roth noted that credit unions with $1 billion or more in assets are 4 percent of the credit union industry; but account for almost 75 percent of the tax benefit.
The opinion piece also stated the recent trend of tax-exempt credit unions buying taxpaying banks. Furchtgott-Roth pointed out: "This is no different from corporate inversions, except that no company has moved to Ireland."
Furchtgott-Roth concluded "[a]s Congress proceeds with tax reform, members should consider uprooting this outdated exemption and no longer picking winners and losers. Taxpayers should not have to subsidize a credit union's name on a stadium, or people's purchases of aircraft and boats."
Read the opinion piece.
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Our board decided years ago to accept federal taxation in order to achieve the same regulatory powers as a bank. This would have meant acces to capital, greater business loan capacity and a normal reach to customers (not the inconsistent FOM stupidity that exists).
ReplyDeleteWe decided not to change to a savings bank because of all the hurdles NCUA put up, the cost the hurdles would have meant to our members and that clearly some in the industry organize obstruction of the member vote.
We easily would have made scores of millions more loans in our community by now.
The NCUA, CUNA and NAFCU are all culpable as are some state leagues.
We aren't the only CU that would have left, were it not for the barriers.
Congress has to know that NCUA has done this and against what they expected in HR 1151.
When will Hensarling and Congress correct this egregious and blatant disregard of their own law?
If we are going to pay taxes we simply want the same rules, we will take care of the rest.
The FDIC and several State Banking Commissioners HAVE been thru these NCUA driven bank conversion derailments. Top officials know first-hand that communities are missing out on what would have been the best local consumer bankers in their towns, no longer hidden in the cu brand.
DeleteKeith, FDIC needs to extend its DIF insurance jurisdiction to STATE chartered credit unions. Cu member voting would approve moving to FDIC insurance. From there, State Commissioners can simply grant cu's bank charters when best for communities and the cu. It can bring FDIC dozens if not 100's of community bank sized "seasoned de novos" from good cus being pushed out of service by FOM overlaps. ICBA and ABA would discover that the FDIC already knows what the writer has well stated above here.
NCUA needs to be adjusted by congress.
DeleteNCUA should not be an insurer and safety and soundness supervisor and is incapable of supervising most of the credit unions that are big, say, $1B in assets.
They have a conflict of mission and most of us know it. They don't shut down wescorp or melrose but they whistle by the graveyard of all the small credit unions.
Let's face it, the only reason CUNA, nafcu and NCUA aren't dead is because all the little credit unions are being used by them to justify their "mission".