We are in 2021. The country is still grappling with a global pandemic and its effects. There are millions of Americans unemployed, after businesses were forced to shut down, and more than 500,000 people in our country have lost their lives to COVID-19.
You would think all of this would lead Florida bankers to kick their boots and find a way to help the country recover. You would think that they are focusing on how they can set up more branches in underserved areas and take advantage of the fact that their profits soar despite scandals.
But in his May 5 editorial, “Biden, Congress must tackle the national debt before it brings down this nation,” Alex Sanchez, president of the Florida Bankers Association, targets credit unions, which are exempt from corporation tax.
But what Sanchez didn’t say is that credit unions are exempt from corporate tax because they are not-for-profit financial cooperatives. Credit unions, by virtue of their structure and the fact that they reinvest all of their income in their members and communities, remain tax-exempt entities. This exemption has been considered several times by Congress, most recently during comprehensive tax reform efforts in 2017. And, once again, Congress has spoken loudly, saying that credit unions continue to benefit from their tax relief. exemption every day. That same effort, the Tax Cuts and Jobs Act (TCJA) of 2017 resulted in an annual tax cut for U.S. banks of an average of $ 30 billion per year, or 15 times the size of the tax status of co-ops. credit.
In Florida last year alone, deposits in banks increased by $ 105 billion, 45% more than all deposits accumulated by Florida credit unions since they began operating in the United States. ‘State almost 100 years ago.
Also in 2020, Florida credit unions provided more than $ 637 million in direct financial benefits to 6.2 million members of state credit unions. That’s $ 103 per member and $ 215 per household. Florida credit unions managed to do this when they only had a 9.2% market share in Florida, slightly above the national market share of 7.9%.
Nationally, the tax status of credit unions is not an unfair advantage. Each year, credit unions contribute more than $ 17 billion in federal, state and local taxes. Members of credit unions pay more than $ 1.5 trillion in income taxes each year. Imposing an income tax on credit unions would generate enough revenue to run the government for just 2.7 hours. Instead, this money is used by citizens to buy tangible goods, such as houses and cars. It benefits the people and communities served by credit unions.
Sanchez wants everyone to believe that taxing credit unions is the solution to solving the national debt. It’s ridiculous – besides, the premise is wrong in math. If Congress imposed federal income taxes on credit unions, it wouldn’t increase the amount of money Sanchez thinks, and it would likely result in a deleterious change to the credit union system. It could end in a banking monopoly, which I’m sure Sanchez wants.
Finally, Sanchez says banks don’t have such tax-exempt status, but what he doesn’t say is that there are 21 subchapter S banks in Florida that don’t pay d federal corporate tax; instead, taxes are paid by shareholders, much like members of a credit union. If Florida banks were structured like credit unions, the $ 4.9 billion paid out in dividends to shareholders over the past decade would have benefited members instead.
If it is so easy to be a credit union, we urge all banks to convert their charters to credit unions, give up their billions in profits and join the movement of people who help people.
Jared M. Ross is President of the League of Southeastern Credit Unions & Affiliates.