Two recent op-eds have called on Congress and the Trump Administration to end the credit union industry's preferential tax treatment as part of tax reform.
In an op-ed in the Charlotte Observer, Yael Ossowski, deputy director of the Consumer Choice Center -- a D.C.-area consumer advocacy group -- called on the Trump administration and Congress to take steps to eliminate the credit union tax exemption as part of the broader plan to reform the U.S. tax code. Ossowski wrtoe that credit unions should not "enjoy the same tax-free status as soup kitchens, Goodwill and disaster relief charities."
In the Reno Gazette-Journal, Drew Johnson, a senior scholar at the Taxpayers Protection Alliance, wrote in an op-ed that Congress should end "the practice of using the tax code to pick winners and losers by removing the nonprofit loophole that allows large credit unions to avoid paying their fair share of taxes."
Read the Charlotte Observer Op-Ed.
Read the Reno Gazette-Journal Op-Ed.
Some will call this comment a diversion to your article, but I'm calling it a dose of reality. While you focus on why credit unions should be taxed going forward to bring banks and credit unions on equal playing levels, the reality is that if history continues down the path it is, then neither credit unions nor community banks will continue in existence (taxed or not) due to the growing presence of the big banks. You focus your attention to credit unions, who own approximately 7 to 8% of the total market share. Maybe the focus (for everyone) should be on the fact that the big banks (JPMorgan Chase, BOA, Wells Fargo, Citigroup, and US Bank) are swallowing up market share at alarming rates. The biggest 100 banks in the country have 75% of the market share. In the future, what if there are only 25 for-profit banks that are left offering financial services for Americans? Will it matter whether credit unions were or should have been taxed? Will consumer groups feel their resources were used wisely voicing their opinion that credit unions should be taxed when consumers will be disregarded and taken advantage of by the big banks and only the shareholders of these banks will reap the benefits? We can argue all day about whether credit unions should or should not be taxed, but the reality is that for many banks (especially community banks), the big banks are the bigger threat. Would your former co-workers at the ABA still have a job if there are only 25 big banks left who could advocate on their own and wouldn't need a trade group around?
ReplyDeleteI think our resources (both credit unions and banks) should be used to ensure the existence of smaller financial institutions to help out the average American. As the market share continues to be swallowed up by the largest banks, the only person who is losing out is the average American. For the record, the largest banks have gained nearly 35% of the market share in the last 20 years, while credit unions have gained 1.5%.
David,
ReplyDeleteSome good thoughts.
Only one slight problem.
Nobody has a gun to the head of the 75%.
They’re at the big bank by choice.
And, large credit unions should be taxed.