Wisconsin, fast becoming the nation’s battleground for credit union-bank clashes over the tax exemption and CU to bank conversions, erupted anew last week with dueling press releases following a fresh appeal from the banking lobby to Congress tied to the debt crisis.
In fiery language, the Wisconsin Credit Union League accused large banks of contributing to the nation’s economic woes and “failing to pay their fair share of income taxes” while earning huge profits off the back of consumers through extra fees.
The Wisconsin Bankers Association, which in a July 15 letter to the state’s Congressional delegation claimed the “time is now” to remove the credit union exemption, shot back with an anti-CU attack of its own, arguing that in light of the urgency by federal and state agencies to find new revenue, the CU tax exemption has outlived its purpose.
“The truth is the credit union tax exemption is among the top 15 costliest corporate tax expenditures in our nation according to the U.S. Office of Management and Budget at the rate of $34.5 million annually in Wisconsin and $7.92 billion nationally,” said the WBA.
Moreover, “now is not the time to doggedly protect sacred cows but rather to identify areas in which exemptions are no longer necessary to support an industry which is quite capable of supporting itself.”
The league suffered a setback two months ago when Gov. Scott Walker let stand a WBA-supported statute in a state budget that removes a series of structural barriers permitting CUs to convert directly to banks.
The league, calling the easing “radical” and harmful to CU members, maintained the new law wrongly bypasses the mutual structure and drastically streamlines the process on member voting, sharply reducing disclosure and communication rules.
Regarding the tax exemption fusillade from the bankers, Brett Thompson, president/CEO of the league, charged that “many banks behaved irresponsibly, playing a starring role in causing the collapse of our economy.”
Moreover, “the WBA’s outrageous tax increase plea is based on a hypocritical concern for taxpayers, their never-ending desire to legislate their competition out of business and fuzzy math,” said Thompson.
In its press release, the league identified individual Wisconsin banks that it said skirted paying income taxes. It named Associated Bank of Green Bay as one “which paid no state income tax from 2000-2009 in spite of booking $2.6 million in profits.” M&I of Milwaukee also “paid less than 1% on its significant profits during those same year” and recently laid off 400 employees, the release said.
Thompson said the WBA’s July 15 letter to lawmakers amounts to a “sloppy effort to distract the public’s attention from banks’ lead role in the economic downturn."