the latest credit union radio
of credit unions
McClatchy Employees, as well as all
other credit unions, is a
non-profit financial cooperative.
Credit unions by their very structure
are fundamentally different from banks
in many ways that provide a
significant benefit to consumers.
Because of these differences,
Congress has exempted credit unions
from paying federal income taxes.
Currently the banking industry is
challenging the credit union tax
exemption. We have created this page
to help you understand the value
of credit unions and the importance of
the tax exemption.
credit unions tax
Congress decided in 1937 to exempt
credit unions from federal income
tax because of their unique structure
and role in the financial
services industry. This tax exemption
was reaffirmed by Congress in
1951 and again in 1998. In November
2005, the Ways and Means committee
of the House of Representatives again
reaffirmed the position that
credit unions shoul not be taxed.
Credit unions provide a valuable
alternative to the for-profit banking
system, and continue to serve
consumers who have no other access to
America's credit unions provide
benefits to their members through
higher dividend rates, lower interest
rates on loans, and reduced fees.
Credit unions also benefit all
consumers by creating an environment
that forces banks to compete.
different from banks?
While some consumers may think that
banks and credit unions are
basically identical, there are some
major differences between the two
as the listings below illustrate.
* Owned by their members
* Focused on serving consumers
* Not-for-profit cooperatives
* Volunteer Board and Committees
* Must be eligible to join
* Earnings are returned to members
* Pay payroll, property, and sales
* Owned by their stockholders
* Focused on generating profit
* For-profit business
* Compensated Board of Directors
* Anyone can be a customer
* Profits are distributed to
* Pay federal income taxes, although
some are exempt
credit unions lose
their tax exemption?
The banking industry is asking
legislators to tax credit unions. They
say that the tax exemption gives
credit unions an unfair advantage and
is adversely affecting bank profits.
If that were true, why do banks
report year after year of record
profits? Clearly, the credit union tax
exemption has not affected bank
profits and continues to help credit
unions serve consumers well.
remain tax exempt?
The facts that convinced Congress to
originally grant credit unions
their tax exemption remain true today.
However, if credit unions lose
their tax-exempt status, they will
have to pass along those taxes in
higher fees, higher loan rates, and
lower dividends on savings.
a tax on credit
unions is a tax on consumers!