Washington state’s recently enacted tax on credit unions that acquire banks continues making news.
Background: Effective immediately, the Washington law says state-based credit unions that acquire a bank are now subject to the state’s business and occupation tax of 1.2%.
Details: A new American Banker article (subscription required) notes the first-of-its-kind tax responses to the recent increase in credit union acquisitions of community banks. In the article, Community Bankers of Washington President Kathryn Swenson says community bankers welcome the change to prevent lost revenue when a tax-paying community bank is acquired by a tax-exempt credit union.
Advocacy: The CBW advocated for the law, noting the business and occupation tax exemption for credit unions costs the state approximately $130 million per year. The CBW said if the record pace of credit union acquisitions of community banks continues, local businesses will be deprived of the primary mechanism for reinvestment in Main Street.
ICBA View: In a recent Banking Dive article, ICBA Senior Vice President and Regulatory Counsel Michael Emancipator said Washington lawmakers got it right. “Community bankers applaud state legislative efforts to mitigate revenue loss each time tax-paying community banks are acquired by a tax-exempt credit union,” he said.