A new blog post from the nonpartisan Tax Foundation notes that when a credit union acquires a bank, state and local governments can lose much of the tax revenue that the bank was paying.
Details: According to the Tax Foundation blog post:
A tax preference originally designed to level the playing field now has the opposite effect: creating preferences for one class of financial institutions.
The pace of acquisitions signals that credit unions are no longer alternatives to banking, but competitors with similar product offerings and client bases.
Ending credit union tax exemptions would help protect local and state coffers.
ICBA View: Following the latest acquisition of a tax-paying community bank by a tax-exempt credit union, ICBA last week continued its call for Congress to eliminate the federal tax exemption for credit unions over $1 billion in assets.
Recent Media Coverage: In a recent American Banker article (subscription required), ICBA’s Mickey Marshall noted that large credit unions represent just 10% of the industry but now control nearly 80% of its assets, fueled by continued exploitation of their federal tax exemption and rapid acquisitions of community banks.
ICBA Advocacy: ICBA’s “Repair, Reform, and Thrive” plan and open letter to the 119th Congress urge lawmakers to use the current debate over tax reform to address credit unions’ tax and regulatory advantages. ICBA earlier this year released a policy resolution that formally calls on policymakers to end the federal tax exemption for credit unions with $1 billion or more in assets or to establish tax parity between credit unions and tax-paying community banks.
