There is a Reason Credit Unions are Exempt from Income Taxes
It’s because all credit unions are not-for-profit cooperatives that are owned by their members. And while the members come from all walks of life, by and large those who belong to credit unions are everyday people – 96 million of them, in fact, across the U.S.
As not-for-profits, credit unions return what they earn to their members in the forms of lower rates on loans, higher returns on savings and lower and/or fewer fees.
In fact, for every $1 of their tax exemption, credit unions return $10 to consumers in better rates and lower fees. That’s a solid investment in our communities.
Now, some (mostly banks) say credit unions should pay income taxes, even though it was banks (not credit unions) that took huge governmental bailouts.
The truth is, if credit unions were taxed – and remained not-for-profits – it’s unlikely their members could continue to receive lower rates on loans, higher savings return, and low fees. Just as banks pass along their tax payments in fees and interest rates, if taxed, credit unions would have to pass those expenses along as well.
You might say taxing credit unions is really a tax on 96 million credit union members.
How Tax Status Affects Consumers
The value all consumers receive because credit unions are tax-exempt far outweighs the “cost” to the government.
If credit unions paid income tax, the contribution to state and federal treasuries would make not one penny difference in the taxes you pay as an individual.
All taxpayers have legitimate concerns about the federal budget deficit and state deficits as well. Credit unions and members already share in reducing those shortfalls: you pay taxes on dividends your Coosa Pines FCU accounts earn.
The credit union tax status is one of the highest yielding investments the federal government has made.
To learn more about credit unions, visit aSmarterChoice.org
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