New op-ed says it’s time to end credit unions’ tax exemption

A new op-ed says ending the tax exemption for business entities such as credit unions could help solve the nation’s budget issues.

Details: In The Washington Post (subscription required), Scott Hodge of the Tax Foundation says credit unions are now indistinguishable from commercial banks and are using tax-free cash to purchase community banks, turning taxpaying businesses into tax-exempt ones.

Message to Congress: With representatives from tax-exempt credit unions in Washington, D.C., this week for meetings with congressional offices, ICBA called on lawmakers to ask tough questions about the credit union tax exemption and mission creep.

State Budget Impact: In another recent op-ed, Bluegrass Community Bankers Association Executive Director Jim Decesare said Kentucky’s budget shortfall could be fixed if credit unions paid taxes like community banks.

ICBA View: Following the latest reported acquisition of a tax-paying community bank by a tax-exempt credit union—the second deal of the year—ICBA last month continued calling for policymakers to address the favorable credit union tax treatment that is driving these deals.

Real-World Impact: A recent ICBA data analysis details how these acquisitions are harming small businesses and local communities, finding that in areas where community banks participated in Small Business Administration lending programs, SBA lending fell after nearly 80% of credit union acquisitions.