Hoosier Banker 7 Some healthy sparring has been going on between the credit union industry and the banking community. Though these different types of financial service organizations often agree on issues, there is one place we definitely are not seeing eye to eye: the federal tax-exempt status of credit unions. Lately you may have noticed a flurry of verbal activity in the way of op-eds peppering Indiana news outlets and even garnering national attention. Below are recent op-eds on the topic of credit union taxation, authored by Amber Van Til, president and CEO of the Indiana Bankers Association: • “Consumers Pay For Credit Union Federal Tax Entitlement,” was published Aug. 7 in Inside INdiana Business and Aug. 8 in the ABA Banking Journal. • “Credit Unions Should Pay Their Fair Share,” appeared June 11 in the Indianapolis Business Journal. • “The Time Has Come for Credit Unions to Pay Federal Corporate Taxes,” ran in four news sources in May: The Indianapolis Star; The Journal Gazette, Fort Wayne; the Terre Haute Tribune-Star; and The Times of Northwest Indiana. The Indiana Credit Union League has been writing opinion pieces, as well, sometimes in response to IBA material, sometimes vice versa. Verbal jousting aside, one truth remains: Reality is on our side. Following are examples of some weak credit union arguments. Credit union fiction: Although the banking industry is performing well, it selfishly is attacking credit unions in order to do even better. Industry fact: The banking industry is indeed doing well, thanks to sound management and hard work, but the status of taxpaying, depository banks has no bearing on this issue. What is of concern, to all taxpayers, is that credit unions are not paying their fair share in federal taxes. For this reason, multiple voices are joining in with bankers in pointing out the injustice of the outdated federal credit union tax exemption. Several nonbank entities seek reform, including consumer groups, legislators and even other credit union representatives, because we all pay the price when others do not pay their due. Credit union fiction: Banks keep their rates low in order to compete with the low rates that credit unions offer. Industry fact: While it is true that credit unions are able to offer low rates, due to the artifice of their federal tax-exempt entitlement, they are not the only competition banks face. Banks also compete against each other, and we welcome free market competition. We only ask for a level playing field. Credit union fiction: Credit unions are entitled to federal tax exemption, because they are member-owned. Industry fact: Mutual savings banks, which are owned by their depositors, pay federal taxes, as do mutual insurance companies, owned by their policyholders. These coNOTABLE QUOTES Banking Community Service on Twitter First Savings Bank, Clarksville · @fsbindiana · Aug. 8 “Proudly supporting our communities! First Savings Bank’s staff served breakfast to the Crawford County School Corporation this morning. We hope you have an amazing school year!” Centier Bank, Merrillville · @CentierBank · Aug. 2 “As a Founding Family and Founding Business for @CityofWhitingIN, the Schrage Family and Centier are proud to be the first Founding Partner for the @MascotHall of Fame, a $250,000 commitment! #nwindiana” Merchants Bank of IN Indiana, Carmel · @MerchantsBankIN · July 30 “Thank you to our MPACT Volunteers. Sixteen employees participated in a project with @IndyHabitat and King Park Community Development Corporation to rehab a home in the Kennedy-King Neighborhood in Indianapolis. Project video at https://youtu.be/ Gar9EUI5toM” Security Federal Savings Bank · @sfsbank · July 24 “Thank you for showing your support for #CommunityCares and helping us raise $25,000 to support local students. Learn more at https://goo.gl/GQNtRo #SecFedGivesBack” German American Bank, Jasper · @_GermanAmerican · July 19 “Our team serving Dubois County is proud to give back to the local community by volunteering with the Dubois County Community Meal program. With a mission to reach out to those in need + provide a good meal, our team enjoys volunteering through the year with this great organization.” Follow IBA Twitter: @indianabankers Twitter Clay W. Ewing Chairman Indiana Bankers Association President, Chief Banking Officer and Secretary to the Board of Directors German American Bank, Jasper CHAIRMAN’S REPORT operatives pay federal taxes, so member-owned credit unions likewise should be accountable. Credit union fiction: Credit unions fulfill their mission of serving “persons of small means,” united by common bonds. Industry fact: Credit unions have strayed far beyond their mission, stretching common bonds to absurd degrees. Case in point: The Golden1 Credit Union (Golden1.com), based in Sacramento, California, boasts its meaningless common bond on its website: “All Californians can join! If you live or work in California, you are eligible.” All Californians? Nearly 40 million people live in California, with an untold number of nonresidents working there. What about Hollywood movie stars? Are they persons of small means? Additionally, non-Californians qualify for Golden1 Credit Union by joining a “Financial Fitness Club” for a grand total of $8. Arguments keep flying back and forth regarding the federal tax-exempt status of credit unions, but in the end it comes down to a simple truth: Credit unions have veered from their mission. The federal tax exemption is an unjustified entitlement that has got to end. HB
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