ICBA Logo

Tax-Exempt Credit Unions Insult Three Million Taxpaying Small Businesses

WWR ARTICLE
APRIL 30, 2004

 

The tax-exempt credit unions insult three million taxpaying Subchapter S small businesses by wrongfully suggesting they do not pay taxes. The Credit Union National Association is defending a large and growing tax-free mega credit union industry that has come under increased scrutiny from policymakers and a recent GAO report to reassess its tax-exempt status and explain why credit unions are failing to meet their tax-exempt mission of serving people of modest means. To divert attention from this fresh credit union scrutiny, a new CUNA letter is asking the IRS to look into Subchapter S banks and businesses. Ironically, these businesses do pay billions in taxes each and every year while many tax-exempt credit unions mushroom in size and scope. Somehow or other, credit unions are trying to obscure the simple fact that Subchapter S businesses do pay income tax and credit unions do not.

The facts are clear. Subchapter S businesses and community banks must allocate their income to their shareholders who pay federal income tax on this income at up to 35%. Additionally, state income taxes also apply to this same income. We suggest a simple solution for CUNA's bizarre call to examine the benefits of Subchapter S banks: allow any credit union to also "benefit" by becoming an S corporation and paying a fair share of federal and state income taxes. See www.icba.org for additional information to help stop unfair credit union competition.




All contents copyright 2014 Independent Community Bankers of America. All rights reserved.
Privacy Statement | Legal Notice