Large, corporate credit unions that are effectively operating as tax-free banks are endangering the traditional community bank model and doing harm to local communities, according to an Illinois Bankers Association op-ed published in The State Journal Register earlier this month. IBA VP Ben Jackson pointed to a disturbing trend seen recently of large credit unions buying community banks.
Jackson noted that two such acquisitions have occurred already this year in the state of Illinois. “This corporate acquisition trend harms all Illinoisans,” he wrote. “It means lower corporate income tax and sales tax revenue for much-needed state and local services. And it means the loss of the cornerstone of many communities—an independent, local financial institution.”
Jackson called on state and congressional lawmakers to reexamine the credit union tax exemption and support greater parity between taxpaying banks and tax-exempt credit unions. “It’s impossible for large, corporate credit unions to say they are not banks—and that they shouldn’t pay taxes—if they are buying and absorbing their tax-paying competitors.”