The Pennsylvania Credit Union Association reacted quickly last week in opposing a proposal to eliminate the tax exemption for credit unions and other nonprofits.
In an Aug. 14 letter sent to Pennsylvania Auditor General Jack Wagner, the president/CEO of PCUA, James McCormack, warned that lifting the tax exemption would caus serious harm to the CU business model and the industry as a whole.
It also would be injurious to the state's financial well being because CUs have already proven their strength and worth by coming to the financial aid of thousands of state employees who for weeks have missed paychecks, he added.
Wagner in a statement estimated that $100 million might be gained by "suspending, reducing or eliminating" tax breaks for Pennsylvania nonprofits for the duration of the current financial crisis. Wagner argued that the state's tax code "is filled with tax breaks for special interests and they should be thoroughly reviewed."
McCormack replied that "there are hundreds of stories to illustrate how the tax-exempt status of credit unions benefits residents and communities of the commonwealth." By eliminating the tax exemption, "earnings and profits would necessarily become a focal point" for credit unions rather than "the current focus of providing quality services and attention at low to no cost to members and communities."
As part of a package of cost cutting steps to solve the impasse, Wagner also suggested the state start making major reductions in Medicaid payments and eliminate state welfare waste.
McCormack wrote that Pennsylvania "consumers receive a better deal in lower interest rates on loans and higher rates in savings due to the credit unions' cooperative structure."
--jrubenstein@cutimes.com
In an Aug. 14 letter sent to Pennsylvania Auditor General Jack Wagner, the president/CEO of PCUA, James McCormack, warned that lifting the tax exemption would caus serious harm to the CU business model and the industry as a whole.
It also would be injurious to the state's financial well being because CUs have already proven their strength and worth by coming to the financial aid of thousands of state employees who for weeks have missed paychecks, he added.
Wagner in a statement estimated that $100 million might be gained by "suspending, reducing or eliminating" tax breaks for Pennsylvania nonprofits for the duration of the current financial crisis. Wagner argued that the state's tax code "is filled with tax breaks for special interests and they should be thoroughly reviewed."
McCormack replied that "there are hundreds of stories to illustrate how the tax-exempt status of credit unions benefits residents and communities of the commonwealth." By eliminating the tax exemption, "earnings and profits would necessarily become a focal point" for credit unions rather than "the current focus of providing quality services and attention at low to no cost to members and communities."
As part of a package of cost cutting steps to solve the impasse, Wagner also suggested the state start making major reductions in Medicaid payments and eliminate state welfare waste.
McCormack wrote that Pennsylvania "consumers receive a better deal in lower interest rates on loans and higher rates in savings due to the credit unions' cooperative structure."
--jrubenstein@cutimes.com
