GAO Finds Bank '04 Tax Deductions, Credits Over $100 Billion; Net Income Doubles CUs'
WASHINGTON -- The credit union trade associations are pounding home the messages from a new Government Accountability Office study finding that credit unions have not negatively impacted the ability of banks and thrifts to make money.
The study, requested by then-Representative Bernie Sanders (I-Vt.) who now serves in the Senate, found that banks and thrifts' net income increased an average of 7% annually over the last decade, while credit unions' net income was up just 3% in the same time period. "While they are claiming credit unions are taking over the world, their net income is more than twice that of credit unions," NAFCU Director of Legislative Affairs Brad Thaler observed. Sanders' request for the study was timed with NAFCU's 2006 Annual Conference.
CUNA noted that the study showed bankers' return on average assets has increased since 1993 to 1.27% and thrifts are at 0.96% while credit unions' has remained relatively flat at 0.81%. "This study pounds a big dent into the bankers' persistent and loud argument to Congress that banks are suffering at the hands of credit union competition..." CUNA President/CEO Dan Mica said. "Their complaints--and opposition to CURIA--are rooted in their fundamental zeal to drive out other providers in the financial services industry."
The study also showed that banks' tax deductions totaled $108 billion in 2004 and tax credits tacked on another $200 million. GAO's report stated, "According to IRS data and officials, banks and thrifts use tax deductions, credits, and other provisions that are generally available to all corporations. Treasury considers only one tax provision--the deduction of excess bad debt reserves--a tax expenditure available exclusively to banks and thrifts and estimates revenue losses for this tax expenditure at $10 million in 2007."
At the same time banks have fought to have credit unions taxed, which could bring in approximately $14 billion in potential revenue over 10 years.
Thaler said that he expects Sanders' office will study the report's findings and observers will have to wait and see if it leads to further study, hearings, or legislation.