Many people don’t know the differences between banks and credit unions. It’s easy to understand why there would be confusion because today, credit unions have abandoned the ideals they were once founded on and operate like banks. I want to help you understand the TRUE differences between banks and credit unions.
Credit Unions Do Not Pay Income Taxes
In the 1930s, Congress established credit unions to provide services to defined niche groups of low to moderate income people who may have difficulty accessing credit. To help support this mission, Congress exempted credit unions from state and federal income taxes.
Today, credit unions are a $1 trillion industry led by millionaire executives. They have transformed into large, complex financial institutions that no longer resemble a small, regional organization supporting specific groups and populations. Yet they still have that tax-advantaged status that they leverage solely for their own benefit.
How do you feel about a lucrative $1 trillion industry
paying less than you do in income taxes?
The credit union industry doesn’t contribute a single penny in income tax to help fund national defense, education, food programs or health services. Lincoln Savings Bank and other community banks contribute millions in taxes each year to fund these programs. As an individual tax payer, you will pay more in taxes each year than all credit unions combined!
Credit Unions are For Profit
While credit unions operate as not-for-profit, in most cases they have gone far beyond the original intent of their principle mission and values. They now compete for high-dollar commercial and personal loans for businesses and wealthy individuals. Those ventures equate to higher profitability that credit unions claim to return to their members, but instead use for building elaborate new office buildings and paying exorbitant executive salaries.
Credit unions have enjoyed significant growth since abandoning their original mission and enjoy the opportunity to operate like a bank while not paying a penny in taxes. Over the past 20 years, the number of credit unions with more than $1 billion in assets has grown from 13 to 208. That’s great news for the credit unions, but not for our national deficit. If they paid taxes, credit unions would have contributed an estimated $20.5 billion in federal income taxes.
To support the tax equality of financial institutions, and learn more about credit unions’ antiquated tax status, visit the American Bankers Association website or take action and write your congressman. Join the movement and tell credit unions that #ItsTime2Pay.
Sources:
“Tax Credit Unions.” American Bankers Association. American Bankers Association, n.d. Web. 6 Jun. 2016.
