What is Don't Tax My CU all about?
Some bankers and their trade associations are asking legislators to tax credit unions. The truth is, a tax hike on credit unions is a tax hike on all American consumers. You may not realize this, but your credit union doesn't pay federal (corporate) income tax.
Here are just a few reasons:
- Credit unions are not-for-profit, democratic, financial cooperatives, owned by their members.
- Credit unions' board of directors serve as unpaid volunteers, elected by members.
Members frequently let us know how much they love our employees, our service, and how easy it is to do business with us. We love that feedback and appreciate that our members put their trust in us by doing business with Bellwether. Unfortunately, the federal deficit has politicians in Washington considering an overhaul of the federal tax status which could greatly harm Bellwether Community Credit Union (BCCU) by taking away our tax exempt status. All taxpayers, whether members of a credit union or not, benefit from the presence of credit unions in the marketplace. Credit union competition helps keep banks and savings and loan prices lower. For example, credit unions offering credit cards charge an average of one or two percentage points lower interest than those other lenders. Imagine how expensive other lenders would make credit cards, or auto loans and other types of loans, if they didn't have to compete with credit union rates. Bankers say the tax exemption we currently have as a not-for-profit institution gives credit unions an unfair and unwarranted privilege that puts banks at a competitive disadvantage. But in the past two years alone, bank assets grew by $1.13 trillion - that's more than credit unions have grown since they began operating in the U.S. more than 100 years ago: Bank assets grew to $14.5 trillion at the end of 2012. Total credit union assets at year end 2012 were just $1 trillion.
If credit unions paid income tax, as is being proposed, the contribution to state and federal treasuries would make not one penny difference in the taxes you pay as an individual. But the effect such taxes would have on how much you pay for credit union loans for cars, education, and houses, or the dividends you earn on credit union savings, would be significant. Just as banks pass along their tax payments in fees and interest rates, credit unions would have to pass along that expense to members, in the form of higher fees, higher loan rates, and lower savings dividends. Credit unions, if taxed, also would have to take the money from funds otherwise dedicated to reserves - the cushion protecting all members and the credit union from economic shifts. Again, not-for-profit credit unions aren't like banks, which have profits aplenty.
CUs contribute now
All taxpayers have legitimate concerns about the federal budget deficit, and state deficits as well. Credit unions and members already participate in reducing those shortfalls. You pay taxes on dividends your credit union accounts earn, and your credit union pays all taxes except income tax. Credit unions are not-for-profit, democratic, financial cooperatives that serve members. As long as that's true, they're earning their tax exempt status.
What can you do?
You can make your voice heard. Please visit www.DontTaxMyCreditUnion.com to take action and email your U.S. Representatives today!
Want more information? Watch the following video for a simple explanation of the situation and then Take Action.
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