For more information, contact Eric Skrum
608-441-1216 or eskrum@wisbank.com
Eliminating exemption would “raise revenue and level the playing field”
MADISON, WI – Eliminating the credit union industry’s corporate tax exemption would “raise revenue and level the playing field,” according to a comprehensive report issued yesterday by the President’s Economic Recovery Advisory Board (PERAB).
PERAB, which is chaired by former Federal Reserve Board Chairman and Obama administration economic advisor Paul Volcker, was charged with recommending possible tax revisions to simplify the tax code, improve taxpayer compliance and reform corporate taxation. Among other things, PERAB’s recommendations will be submitted to the bipartisan National Commission on Fiscal Responsibility and Reform, which is considering ways to address the nation’s budget deficit and debt.
“Unlike other financial institutions like banks and thrifts, credit unions do not pay corporate taxes on their income. This puts them at a competitive advantage relative to other financial institutions for tax reasons,” the report said. “Eliminating this exemption would raise revenue and level the playing field, but would clearly raise taxes on credit unions.”
Eliminating specific tax expenditures – including the credit-union tax exemption – would improve efficiency while simplifying the tax code. It would also ensure that businesses with similar characteristics are treated equally, the report said.
“Wisconsin’s taxpaying financial institutions that face aggressive competition from profit-driven credit unions applaud and endorse PERAB’s recommendation to level the playing field,” said Kurt R. Bauer, president/CEO of the Wisconsin Bankers Association (WBA). Bauer noted that there are now six credit unions in Wisconsin over $1 billion in total assets making them larger than 95 percent of the state’s taxpaying banks. “With local, state and federal governments all facing serious budgetary emergencies, the largest and most profit-driven credit unions can and should pay their fair share of the tax burden.”
Bauer said that taxpayers currently receive nothing in exchange for an increasingly expensive tax subsidy because the social mission of serving low- to -moderate income populations that once justified the credit union tax subsidy has been ignored, especially by the largest institutions.
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The Wisconsin Bankers Association is the state’s largest financial industry trade association, representing 300 commercial banks and savings institutions, their nearly 2,300 branch offices and 28,000 employees.
