The Impact of CU Taxation
As federal tax reform lingers on Capitol Hill, Credit Union Times asked industry experts how the elimination of the credit union tax exemption could impact balance sheets.
Dan McGowan, CFO at the $172 million Pioneer Federal Credit Union in Charleston, W.V., said his shop is expecting to earn around $800,000 this year, right at 50 basis points on average assets of about $160 million.
A CFO at a credit union with more than $1 billion in assets, who spoke on the condition of anonymity, said taxes and MBL are connected.
“My opinion is that taxes and MBL caps are linked: if we had to pay taxes, there’s no good reason for maintaining the cap. But I think as an industry, we’re much better off with the MBL cap and the tax exemption than with unlimited business lending capacity and a tax burden,” he said, adding that his credit union would suffer if it was taxed.