Utah Op-Ed Calls for End to Tax Exemption for Large Credit Unions

As lawmakers work to overhaul the U.S. tax code for the first time in more than three decades, an op-ed posted on Utah Policy Daily this week called on Senate Finance Committee Chairman Orrin Hatch (R-Utah) to more closely examine the tax exemption granted to the nation’s largest credit unions.

Recounting his previous experience as a member of Deseret News Employee Credit Union — which served a small segment of customers who shared a common bond as employees of a local news station — Utah Policy Daily publisher LaVarr Webb noted that “this small credit union fulfilled the traditional role of a credit union and its tax exemption made sense. Today, however, gigantic multi-billion dollar credit unions are just like banks. They operate like banks. They provide large commercial loans like a bank. There is no meaningful common bond.”

Webb pointed out that the income tax exemption places banks at a competitive disadvantage to credit unions, which can “offer lower credit rates and devote more money to expansion.” Removing the tax exemption for credit unions with more than $500 million in assets could generate as much as $35 billion in federal tax revenues, he added. “These big, bank-like credit unions tilt the playing field, don’t contribute to tax coffers, and compete unfairly with tax-paying community banks. It’s a big-business tax loophole that is no longer defensible.”


About Author

Monica C. Meinert

Monica C. Meinert is deputy editor of the ABA Banking Journal and editorial director at the American Bankers Association, where she oversees ABA Daily Newsbytes.