As lawmakers contemplate further changes to the U.S. tax code, Florida Bankers Association President and CEO Alex Sanchez in a CNBC op-ed today made the case for closing the outdated loophole that allows large credit unions to avoid paying federal taxes, even though they effectively operate in the same manner as taxpaying banks.
Sanchez cited as an example the nation’s largest credit union, Navy Federal, which reported $1.4 billion in profits last year. Without the tax exemption, Navy Federal would have paid $300 million in federal corporate taxes for 2017, he said. In addition, credit unions continue to pour money into executive compensation packages, multimillion dollar campus renovations and stadium naming rights, rather than passing along savings to their customers.
“Credit unions argue they are returning their ‘profits’ to their members, or customers, in the form of better rates on banking products and services,” Sanchez wrote. “Let me debunk that argument once and for all. If you examine the rates for savings accounts, certificates of deposit or loans at credit unions versus tax-paying banks, they are very similar.”