State bank trades cheer Hatch review of credit union tax status
WASHINGTON — Fifty-two state bankers associations sent a letter to Senate Finance Committee Chairman Orrin Hatch, R-Utah, on Tuesday asking him to keep pressing on his criticisms of the credit union federal tax exemption.
“There is no reason why the largest credit unions, which act and look just like the taxpaying banks they compete with, should be completely free of income taxation,” the letter said.
Hatch sent a letter to National Credit Union Administration Chairman J. Mark McWatters on Jan. 31 expressing concern “that the credit union industry is evolving in ways that take many credit unions further from their tax-exempt purpose.”
The bankers, who thanked Hatch for his leadership in helping to pass the recent tax reform bill, suggested that he go further and adjust the credit union tax exemption.
“We urge you not to let the status quo stop your committee from ending this outdated tax exemption,” their letter said.
Credit unions and banks have long been at odds over the former's tax-exempt status.
Bankers also asserted that the NCUA sometimes acts as an industry advocate rather than a regulator, which has led to credit unions resembling commercial banks but with advantageous tax status.
“Although the credit union industry works to paint a picture of small financial institutions struggling to get by—and the overwhelming majority of credit unions fit into this category and should maintain their tax status—there is a separate class of credit unions that have moved from church basements to conglomerates,” said the letter. It added that the number of credit unions with more than $1 billion in assets has “more than doubled in the past decade.”
The bank associations signing the letter represented every state in the country.