Opinion: Congress Should Address Large CU Unfair Tax Advantages and Increase Transparency

An opinion piece by Thomas Aiello in RealClear Markets called on Congress to address the unfair tax advantages of large credit unions, as they have strayed from their mission.

Aiello wrote that the industry's deferential regulator has turned a blind eye to large credit unions' abuses of their preferential tax treatment.

For example, Aiello noted that many of these large credit unions allow virtually anyone to join.

In addition, he pointed out that these big credit unions are buying taxpaying community banks, "permanently taking taxpaying business entities off treasuries’ tax rolls and shrinking the tax base." Aiello wrote this is a "textbook example of poor tax policy."

He called on Congress to require all credit unions to file Form 990s, as federal credit unions are not required to file Form 990s. He stated that the "Form 990 is the main enforcement mechanism to ensure compliance with Section 13602 of the Tax Cuts and Jobs Act, which requires a 21 percent excise tax on not-for-profit executive compensation above $1 million."

The op-ed noted that this preferential tax treatment should be retained for small credit unions with a limited common bond.

Thomas Aiello is a policy and government affairs associate with the National Taxpayers Union.

Read the opinion piece.