MCUA Tax Status Letter Also Highlights Subchapter S Issue
In advance of the July 26 deadline for U.S. Senators to submit their input regarding priorities for comprehensive tax reform, the Missouri Credit Union Association (MCUA) provided U.S. Senators Claire McCaskill (D) and Roy Blunt (R) with letters urging them to make retaining the credit union tax status a top priority.
The letters provided Senators and their staff with information about the need for credit union services in Missouri communities, how the credit union difference is demonstrated across the state, and the negative impact an additional tax on credit unions would have on all consumers. The letter also details the reality of Subchapter S banks in light of calls by bankers for credit union taxation. Click here to view the full letter.
In the letter, MCUA President/CEO Don Cohenour writes:
While 40 percent of Americans are credit union members, credit unions hold only six percent of all financial assets. In comparison, banks hold 93 percent of all financial assets in the United States. They boast record profits while consumers continue to struggle. Yet, banks claim an unfair advantage and are calling for the taxation of credit unions. Are they doing this for a genuine concern of the government’s bottom line – or for their own self-interest?
At the same time they call for credit union taxation, bank leaders fail to mention the Subchapter S tax treatment that a growing number of banks enjoy. As a Subchapter S institution, these banks DO NOT pay corporate income tax. At last count, there were 2,258 Subchapter S banks in the United States. Nationally, the bank Subchapter S tax status totals an estimated $829.2 million in foregone federal tax revenue each year.
“I don’t understand how banks can justify attacking credit unions’ tax status when they themselves lobbied for banking institutions to be included in the Subchapter S tax code back in 1996. And bankers continue to lobby for additional tax breaks while attacking credit unions tax status, which has been in place since the beginning of our existence,” says Cohenour. “It’s important to shine a light on the bankers’ hypocrisy.”
Here are just a few details on Subchapter S banks available on the Credit Union Advocates of Missouri website.
- Subchapter S banks consist of nearly 40% of the banking industry in Missouri and 1/3 of all banks nationally.
- A Florida International University study determined that only shareholders or the owners of the Subchapter S bank benefit from Subchapter S tax benefits.
- One Subchapter S bank in Missouri has $17.7 billion in assets. There are a total of 118 Subchapter S banks in Missouri with a total of $38 billion in assets. The entire Missouri credit union industry has approximately $11.7 billion in assets.
Click here to see more information on Subchapter S, the credit union difference, financial tips and profiles on people helped by credit unions. Credit unions are encouraged to use or link to information on the Credit Union Advocates of Missouri web site as part of the Don’t Tax My Credit Union effort.
If you have questions about Don’t Tax My Credit Union, contact Amy McLard via e-mail or phone at 314-542-1370. For credit union advocacy news, follow Amy on Twitter at @AmyMcLard and Credit Union Advocates of Missouri at @CreditUnionsMO.