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WASHINGTON-CUNA Chief Economist Bill Hampel took on American Bankers Association Senior Economist Keith Leggett one-on-one regarding credit unions’ tax-exempt status before the National Council of State Legislatures in San Francisco last week. On July 22, Hampel outlined four simple reasons for the state lawmakers why credit unions are exempt from most taxes and why that should remain as it is: * Credit unions are very different from banks; * Solid public policy reasons stand behind credit unions’ tax-exempt status; * Taxation of credit unions would produce insignificant revenue (while threatening the greater benefits credit unions provide their 84 million members); * Greater revenue potential exists by reducing banks’ exploitation of tax loopholes. “Credit unions of all sizes remain true cooperatives that operate solely for the benefit of their members,” Hampel said, which produces other differences bankers do not fully appreciate. “Indeed, when comparing salaries at similar-sized institutions, bank CEOs on average earn considerably more than credit union CEOs, not to mention the availability of additional remuneration through stock options.” He added CUNA has estimated these benefits to credit union members in 2002 totaled $6.4 billion. “On the other hand, had all state and federal credit unions been subject to both state and federal income taxes, the total of that revenue would have been just under $2.1 billion. The benefit to members exceeds the total tax exemption by a factor of three-and exceeds the state tax exemption by a factor of 17.”

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