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.”