Banks versus credit unions
Credit Unions: Business Structure Does Not Justify Tax Exemption
The recent guest opinion written by a credit union executive contained several inaccurate statements. First and foremost, tax exempt entities do not receive their tax exemption because of their structure. They receive their tax exemption because they are supposed to fulfill a specific public policy mission.
I know that structure does not dictate tax exemptions because the mutual savings association I work for is structured exactly like a credit union. Brainerd Savings and Loan is a mutual, owned by our individual members. Just like a credit union, we are a member-owned cooperative that exists to provide high quality products and services to our member-owners.
The major difference is that we have been paying federal and state income taxes since the early 1950s. Before that, we were tax exempt, too. At that time, Congress decided that mutual savings associations and mutual savings banks had become too much like the tax-paying banks against which they competed and repealed the tax exemption. Our industry has been paying its fair share of taxes ever since.
It is time for policy makers to examine the credit union industry’s tax exempt status. Credit unions were once different. They were small institutions with a membership that fit within a close-knit common bond. Now the concept of common bond has been expanded to the point that it is completely meaningless. Credit unions once served people of modest means who did not qualify for credit through normal channels, which was a legitimate public policy mission that justified their tax exemption. But today credit unions compete against tax-paying competitors for the same exact customers.
Our state and federal government need additional tax revenues. It is time for policy makers to repeal the credit union tax exemption so that credit unions pay their fair share.
John F. Forrest, President
Brainerd Savings and Loan