The accelerating trend of credit unions acquiring banks “means fewer businesses contributing to the tax base supporting our communities,” wrote American Bankers Association Chair-Elect Laurie Stewart in a Puget Sound Business Journal op-ed today. Stewart’s op-ed came less than a week after the 11th credit union acquisition of a bank was announced in 2019 — two more than the nine deals that were announced in all of 2018.
Stewart’s op-ed documented the cost the credit union tax exemption has on other businesses. In Washington state, 44 types of service businesses — including banks — saw a 20% tax hike to support higher education, on the theory that these businesses employ more college-educated workers. “But credit unions, with a similar workforce to commercial banks, won’t pay these new taxes to support Washington’s colleges and universities,” Stewart explained. “If your business is in one of the categories facing higher business and occupation taxes, you’re paying more simply because credit unions pay nothing. If they paid business taxes at the same rate banks do, it would add tens of millions annually to the state treasury. That number — the amount the rest of us pay subsidizing them — will only grow as they acquire more taxpaying financial institutions.”
“A recent [ABA-funded] study by Federal Financial Analytics found that modern credit unions are ‘indistinguishable’ from tax-paying financial institutions,” added Stewart, who is president and CEO of Sound Community Bank in Seattle, which itself converted from a credit union in 2003. “Credit unions continue to aggressively push for the authority of commercial banks. They should be required to step up to all the responsibilities that come with it.”
