CU Times reported on Feb. 21 that the nation's bankers have asked the Senate Banking Committee to tax large credit unions. Loudly, and in unison, credit unions must say NO!

Income taxes on “big” credit unions would be the proverbial camel's nose under the tent-flap. It's salami tactics. Bankers know they can't take on credit unions nationwide, so they are going state by state, peer group by peer group, slice by slice.

We need to stand up, together, now. But we also need to become smarter about how we do it. Fast.

Millions of postcards and phone calls saying “Don't tax my credit union!” can still matter. But they'll no longer be enough. Not by a long shot. The audience has fragmented, and it's changed. Politics in our country is different than it was in the past and bankers are ahead of us in figuring that out.

We need to find new ways to talk about who we are, what we do, why and how we do it, and why and how it makes us different from banks. We need to find ways to talk about IMPACT, about mission – yes, we do – and about public policy, the reasons we exist and the unique roles we fill. Most of all, we need new language to talk about positive net revenue.

Income, in the language of taxation, is something that delivers measurable economic benefit to the underlying owner. Credit unions have no income. Period. Credit union owners do have dividend income, which does get taxed. Do we talk about that? We look and are taxed a lot like S Corporations, except our owners don't have any stock to sell. Do we talk about that?

Tax big credit unions? Because they “look like banks?” Which ones look like banks? How do they look like banks? Big commercial portfolios? Nope! Holding companies with investment banking subsidiaries? Not here. Billion-dollar stock dividends? Seriously? The ability to raise capital? That would be another no!

We need to redefine the terms of this debate to highlight what makes us different. Let's stop talking about income statements and profitability. Those terms describe for-profit companies. We have revenue, not income. We have margin, not profit. Words matter, and if we keep letting bankers choose the words that describe us, the battle is already half lost.

Chris Howard

SVP

Callahan & Associates

Washington, D.C.

Instant Insights /

Words Matter as Bankers Target Big CUs&rsquo; Tax Exemption

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