Mica, Matz Write Letters of Disappointment to Democratic Leadership Council
WASHINGTON -CUNA CEO Dan Mica and NCUA Board Member Debbie Matz have each written the leaders of the Democratic Leadership Council regarding the DLC's call to tax credit unions over $10 million in assets. In letters to DLC Chairman Sen. Evan Bayh (Ind.), Vice Chair Rep. Ellen Tauscher (Calif.), CEO...
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WASHINGTON -CUNA CEO Dan Mica and NCUA Board Member Debbie Matz have each written the leaders of the Democratic Leadership Council regarding the DLC’s call to tax credit unions over $10 million in assets. In letters to DLC Chairman Sen. Evan Bayh (Ind.), Vice Chair Rep. Ellen Tauscher (Calif.), CEO Al From, President Bruce Reed, and Leadership Team members Sen. Tom Carper (D-Del.), Pennsylvania State Sen. Jennifer Mann and Columbus Ohio Mayor Michael Coleman, Mica pointed out that 95% of all credit union members belong to the credit unions proposed for taxation under the plan. “As taxing credit unions would lead to the elimination of a cooperative financial alternative for American households, I can only believe that the suggestion to remove the credit union tax exemption either was an oversight or a deliberate disregard of or reflection of ignorance of the facts and public policy reasons that justify this long-standing policy,” Mica wrote. The letter accompanied a nine-page analysis of the impact of the DLC tax proposal which lays out objections to the tax proposal based on five points; that the original justification for the tax exemption still holds, that credit unions serve those of modest means at reasonable cost, that over 86 million credit union members receive substantial financial and nonfinancial benefits from credit unions, that the tax exemption ensures the cooperative alternative is available and that there is no evidence of market disruption from the tax exemption. “Credit unions provide substantial, tangible benefits to members that far exceed the amount of the tax exemption,” CUNA wrote in the analysis. “These benefits are realized in the form of lower fees, lower loan rates, and higher yields on savings. CUNA has estimated that these benefits total over $6 billion a year. That is the additional amount that credit union members would pay if they were to conduct all the business they do with credit unions at banks instead. That is about four times the roughly $1.5 billion that credit unions would pay in federal income tax.” Mica also made the point about the beneficial impact credit unions spread across society, not just to credit union members. “Credit union competition helps keep bank and savings and loan prices lower,” CUNA wrote. “For example, credit unions offering credit cards now charge an average two to three percentage points lower interest than other lenders. Imagine how expensive other lenders would make credit cards, or auto loans, if they didn’t have to compete with credit union rates.” Mica’s letter and CUNA analysis come on the heels of another letter to the DLC, this one from NCUA Board Member Debbie Matz, a Democrat. In her June 21 “Dear Al” letter, addressed to DLC CEO Al From, Matz expressed concern that taxing credit unions would endanger their safety and soundness and generate other “negative public policy results.” “Unlike financial institutions which pay taxes on profits, credit unions are not-for-profit. A tax would erode their net worth and cause many credit unions to fall below the level established by Congress to protect safety and soundness,” Matz wrote. “Once a credit union falls below the statutory level, the law requires NCUA to take a series of `Prompt Corrective Actions.’ These required actions may result in the credit union being merged or liquidated out of business.” She also wrote that taxing credit unions would likely have the unintended impact of forcing them to cut back on their branching, particularly in underserved areas. -
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