Note: This diary was originally published on July 23; there have been some additions and edits
If, like me, you are of the 96 million Americans who rely on a not-for-profit credit union for fairly priced financial services, it's not too late to make your voice heard. Finance Committee leaders are working on a proposal for a new U.S. tax code and Big Banks are asking them to pick the pockets of Credit Union members.
Credit Unions have their members, their voices, and their stories. It's time to use them.
If you're a Credit Union member, you know CUs are not-for-profit financial cooperatives, have volunteer boards of directors and operate under the seven Cooperative Principles.
If you want to fight back against the Big Banks, take a minute to call, send an email, or tweet your representatives using the #DontTaxMyCU hashtag and ask them to keep the income tax exemption for CUs.A Little History
You can visit http://www.donttaxmycreditunion.org/ and click on Take Action to send an email straight to your legislator. If you can, be specific about how your Credit Union has helped you.
Credit unions were formed in the 1930s by Congress as not-for-profit member-owned financial cooperatives. That's why they're exempt from federal and state income tax. That tax exemption comes with tight regulations. They are limited in the types of risks they can take, who qualifies as a member and even what percentage of assets they can lend to small businesses. While CUs don’t pay federal income taxes, they do pay local real estate and personal property taxes and all payroll-related taxes.
The Credit Union Difference
CUs offer many of the same financial services and products as a bank, however, they are different. Unlike a bank, CUs are not-for-profit and are owned by you—the member—instead of shareholders. While CUs need to make enough to stay in operation, their primary motivation isn’t profit—it’s helping you improve your financial well-being.
Because CUs are not beholding to stockholders or Wall Street, they can look beyond the bottom line and invest time and resources in financial products and services that are genuinely beneficial to members.
What’s at Risk
If credit unions are required to pay federal and state income taxes, you - the member - would shoulder the burden of those new taxes. CUs would be forced to make up the difference by charging higher rates on loans, paying less on savings, and implementing new fees. The estimate is for every $1 of revenue raised, CU members could lose $100 of benefits.
Even non-members would suffer, because banks would face less competitive pressure from credit unions to keep prices and fees low. And despite all these negative consequences, the amount of tax revenue generated would not solve the nation’s fiscal challenges because credit unions are a small industry compared to very large for-profit banks.
Only 6% of deposits in America are held in CUs. Yet bankers will argue that CUs have an unfair advantage and should only be allowed serve "the little guy" (the customers they don't want). They will say that CUs have strayed from their original mission. They're wrong. And they're scared.
Disclaimer: I work at a Credit Union; but I was a Credit Union member long before I worked at one.
11:47 AM PT: added tag