Tax Threats Seen As Challenge To Dual Chartering
Credit unions are happy to point out to state lawmakers who are considering imposing taxes on CUs the situation in Utah, where a number of credit unions simply converted to federal charter rather than face the lingering threat of taxation-but at least one credit unionist is wary of that strategy.
"My concern is that as more states are driven to convert to federal charters, I feel like we're being herded to the federal charter," said one attendee at CUNA's Governmental Affairs Conference during a session on fending off banker attacks. "It's like we're being driven to convert, and then they'll focus on the federal tax exemption."
CUNA's John McKechnie suggested this is exactly why it's so important to maintain a healthy dual chartering system. But while the threat of mass conversion to federal charters should any states decide to impose a new tax on credit unions may be a powerful argument to challenge the wisdom of such legislation, McKechnie agreed that such a exodus is not the answer in the long run.