The credit union tax exemption from corporate income taxes is treated as a tax expenditure for budgetary purposes. Tax expenditures are viewed as alternatives to other policy instruments, such as government spending or regulatory programs.
But unlike government spending, some tax expenditures, such as the credit union tax exemption, lack accountability and transparency. In other words, is this preferential tax exemption being used for its intended purpose?
For example, last week Senator Jeff Flake (R - Arizona) requested detailed information from Secretary of Defense Ash Carter and Chief of the National Guard Bureau General Frank Grass regarding marketing, advertising, and promotion contracts between branches of the Department of Defense and professional sports and collegiate sports teams. Senator Flake requested this additional information on taxpayer-funded payments to sports teams for honoring U.S. military service members, after the senator highlighted a $115,000 payment from the New Jersey Army National Guard to the New York Jets for advertising services that included recognizing soldiers as “Hometown Heroes” at games.
Because these marketing arrangements are taxpayer funds spent by the government, Congress is able to exercise its oversight authority. Congress can shine a light on these practices.
The same cannot be said about the credit union tax exemption. The National Credit Union Administration (NCUA) has no clue about how the credit union tax exemption is being used, despite being grilled by former House Ways and Means Chairman Thomas almost a decade ago in November 2005 during a hearing.
For example, the NCUA does not have any information on marketing and advertising arrangements between credit unions and sports teams. NCUA does not have information on how much credit unions are spending on the naming rights to sport and entertainment venues. NCUA does not appear to collect information on senior management compensation at federal credit unions. NCUA does not collect information on who federal credit unions serve.
Outside of a few muckrakers, there is a paucity of information on how credit unions are using their preferential tax treatment.
Congress should demand greater accountability and transparency from NCUA regarding how the credit union taxpayer subsidy is being used.
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Lacks accountability and transparency because Congress enjoys skimming credit unions for campaign funds so they won't do THEIR job dealing with this rogue.
ReplyDeleteCongress enjoys their situation with banks and credit unions.
Both industry's trade associations continue to dump money down the rat hole while neither gets what they want.
Years of this.
We call it insanity.