Senate Finance Committee Chairman Max Baucus and Ranking Member Orrin Hatch have sent a letter to their colleague stating that they want to start with a clean slate on tax reform.
It would be excellent if that really happens. Programs would have to prove that they provide value in order to receive tax exemptions. The senators’ letter described the tax code as “littered with preferences for special interests.”
The exemptions that make it through the process, according to the senators, will have to provide evidence of economic benefit, that they make the tax code fairer, or effectively promote other important policy objectives.
As Meat Loaf sang, “Two out of three ain’t bad.” Credit unions should have no trouble meeting the criteria. In an effort to head off the initiative at the pass, CUNA launched its Don’t Tax My Credit Union campaign, comprising a website on how to get involved, a social media barrage and a traditional media blitz.
What’s been very telling is that only a quarter of credit unions are lobbying through this campaign to protect the tax exemption. Certainly some are using other methods, but only one in four are fighting to maintain the tax-exempt status of credit unions, allegedly the most important advocacy issue of all. Some might say that getting 25% of any group to do anything together is a win.
I’m not faulting CUNA, or NAFCU for that matter. The trade groups send out alerts, provide sample language and offer relevant marketing among other things. What they cannot do is click the send button for your credit union. They can’t put the poster in your lobby or post an alert to your website. Credit unions need to make the time to get involved in matters that threaten their very existence.
On an individual professional level, you’ve discovered that you can’t just work hard and expect to get noticed. You have to promote your hard work and results to those in power. It’s no different at the credit union level.
An expense of this proportion on the credit union community just as the economy seems to be turning the corner could be the death knell for credit unions as we know them. Taxing credit unions would lead to mergers and conversions to bank charters in droves.
Last fall, NAFCU began beating the drum on the tax-exemption issue when it released a study during its Congressional Caucus. “Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy” found that eliminating credit unions’ tax exemption would cost the federal government $15 billion in revenue, $148 billion in GDP, and 1.5 million lost jobs over the next decade. According to NAFCU, consumers are benefited by $10 billion per year because credit unions are exempt from federal taxation. Bank customers also benefit from credit unions because the increased competition keeps rates lower. The cost to bank customers if credit unions’ market share were cut in half between 2005 and 2011 could have reached as high as $6.3 billion per year, totaling $30 billion, the report portrayed.
More recently, in response to the senators’ letter, NAFCU’s incoming CEO, Dan Berger, responded with a letter that read, “The efforts of credit unions and the large positive impact they have on the financial welfare of American consumers would not be possible without the credit union tax exemption…Without credit unions, for-profit banks would remain unchecked and likely increase rates and fees on consumers. Additionally, many consumers would not have access to traditional financial services institutions and have no choice but to turn to high-cost predatory alternatives.”
Citing Mr. Loaf again, “Baby, we could talk all night, but that ain’t getting us nowhere.” Credit unions can easily demonstrate what all of their talk is about. Credit unions do tremendous work in their communities and inviting your members of congress to some of these events, even if they don’t show, is a first step. As the invites become more repetitive, they’ll know your institution, see what you’re doing and maybe even attend one or two. Fort Campbell FCU with other areas businesses ran an event from Memorial Day through Independence Day where members could write their thanks to the troops on a Chevy Cruze. It ties in with the credit unions’ field of membership, demonstrates cooperation with other local businesses and is as American as apple pie. Credit unions provide even more than economic support to fulfill the mission for which they are tax exempt. Sing it loud.