Taxpayers Should Know Truth about CU Tax Exemption, NY Banker Asserts
TROY, N.Y. - The impact of credit unions' tax exemption status should be made clear, because taxpayers can expect to pay "$1.36 billion" in the coming fiscal year as a result, one New York banker recently asserted. In a Jan. 17 letter to the Albany Business Review, John M. Scarchilli, president/CEO, Pioneer Savings Bank, wrote "credit unions today have amassed $623 billion in assets nationally, comfortably passing the $257 billion in assets of the 785 taxpaying mutual savings institutions - less than half the size of the credit union industry." "It's time to take a serious look at the tax status of the credit union industry," Scarchilli wrote. "Do credit unions still need protection as a developing industry? Is it fair that they are able to grow at a faster rate and gain competitive advantage by not paying out any portion of their income to the IRS or to New York state? Is it fair that every taxpaying American pays more income tax than the entire credit union industry? In other words, is it time for this industry to join the ranks of the savings and loan and banking industry and begin paying their share?" Scarchilli goes on to write "according to the Bush Administration's fiscal year 2005 budget, the credit union income tax exemption will cost taxpayers and the U.S. Treasury $1.36 billion in the coming fiscal year and $7.88 billion cumulatively through 2009." One solution might be "to draw a distinction, based on size, that would differentiate the small, single-employer credit unions from those that have community charters and compete head to head with financial institutions throughout America's communities," Scarchilli offered. "Possibly small credit unions should continue to enjoy some protections and be free from some of the burden of paying income taxes, but it is time for the American taxpayer to stop subsidizing those credit unions that can well afford to pay their own way," Scarchilli wrote. "It's only right."