They are also exempt from the Community Reinvestment Act.
Membership is wide open now and there is no justification for the exemption other than the politics of the labor movement.
Wrong. Membership is still limited.
I can open an account at a community bank in Oregon or Alabama, even though I reside in Virginia, but I can not acquire membership at a local credit union in either of those two states.
If they are going to be free to conduct full blown banking business, they should not be subsidized by the tax exemption because it gives them a competitive advantage over other financial institutions.
Organizations do not pay taxes. Individuals pay taxes.
Bank customers pay taxes on interest income that the commercial bank has already paid taxes on.
Plus...let's not forget the Community Reinvestment Act, in which the government forces banks to give money to poor people.
The answer is never more taxes and more regulation. Frankly, I'm surprised to see a FReeper like you advocating such a Socialist "solution"...do you work for a bank, by any chance?
Credit unions are a good thing! They almost always have fewer fees, lower interest rates on loans and higher interest rates on deposits. Credit unions have members, not customers.
Truth in Commenting Disclosure:
+I work for a large military credit union.
credit unions are less risky and hold more capital in reserve than most banks do. they have to publish this information inside the branch. my credit union has its assets only leveraged 5x, whereas some lenders are nearly at the legal maximum.
the credit union is a bit slower and we took our mortgage with them as rates were rising because they didn’t adjust theirs as high....if rates drop when we refinance we will likely go outside as the CU will take longer to drop them.
Limited membership - in theory, but it is so ridiculous in its application it is a farce. Membership is effectively wide open. I live in Alabama, so I can’t be a member of a CU in Oregon . . . man, that really cramps my style.
“Organizations do not pay taxes. Individuals pay taxes.”
My bank pays their taxes for them and charges them higher fees and rates to pay the taxes. When a customer compares a CU’s effectively subsidized rates to ours, it is a no brainer to them. FAce the facts, CU’s don’t have to price to cover a 35% income tax at the bank level. If you don’t think it has a major impact on the cost of providing services to your customer you are either igonorant of pricing models or delusional.
I am not advocating a socialist solution. Credit unions are the ones receiving the benefit of a government subsidy in the form a tax exemption. All I am asking for is equal tax treatment to business models that are essentially the same.
“Credit unions are a good thing! They almost always have fewer fees, lower interest rates on loans and higher interest rates on deposits. Credit unions have members, not customers.”
And it is the tax exemption that permits that to happen, to the detriment of the banking system that is the backbone of the American economy. You are obviously clueless and/ or brainwashed.