Our Industry's 2019 Credit Union Campaign is Underway

Credit Union Campaign - End the Free Ride

IBA Op-Ed Calls on Lawmakers to Revisit CU Tax Exemption

IBA’s Vice President of Government Relations, Ben Jackson, recently submitted an editorial illustrating the injustice of the credit union tax exemption. Jackson’s letter draws attention to the alarming phenomenon of credit unions purchasing banks and its detrimental effect on communities. The letter ends with a call to action to tell state and congressional lawmakers it’s time to reexamine the credit union tax exemption.

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Aimee Winebaugh awinebaugh@ilbanker.com Kirsten Davis-Franklin kfranklin@ilbanker.com ilbanker.com | 217-789-9340

State Journal-Register July 15, 2019

Imagine that you own a family-run restaurant in your neighborhood. You’re a local business rooted in the community, and you pay your taxes and contribute to community events. Now picture a larger franchise building a restaurant across the street from your place, offering similar food. That chain restaurant has marketing resources you can’t match, their scale lowers their costs ... and let’s say they have one more advantage: The franchise restaurant doesn’t pay income taxes on their profits, even though they offer very similar food, market to the same clientele, and provide the same level of service that your restaurant does. While this scenario may be the stuff of fiction in the restaurant world (as far as I know, it is), surprisingly, it occurs every day in the banking world. Community banks in many markets throughout Illinois — most of them locally owned, small-scale family businesses — are competing with just over a dozen large, aggressive credit unions. Credit unions enjoy an exemption from income taxes, along with some sales tax breaks because of their historic mission to serve small, interconnected groups of individuals, along with underserved communities. But today’s large, corporate credit unions are not the mom-and-pop institutions of decades past. They now enjoy few restrictions on who they serve while growing at alarming rates. They have abandoned their core mission by focusing on lending to businesses and serving higherincome clientele. The biggest credit unions aren’t credit unions any longer — they are multi-billion-dollar banking corporations that don’t pay taxes. Large, corporate credit unions are helping put many traditional community banks out of business. More troubling, we are witnessing an alarming trend of large, out-of-state credit unions actually buying community banks. There have been two of these acquisitions already this year in Illinois, in Woodstock and Chicago. It’s impossible for large, corporate credit unions to say they are not banks — and that they shouldn’t pay taxes — if they are buying and absorbing their tax-paying competitors. This corporate acquisition trend harms all Illinoisans. It means lower corporate income tax and sales tax revenue for much-needed state and local services. And it means the loss of the cornerstone of many communities — an independent, local financial institution. We have asked our state and congressional leaders to reexamine the unfair tax benefits provided to large, corporate credit unions. We encourage all Illinoisans to ask their state lawmakers and members of Congress to support local community banking by providing tax parity in the financial services industry. Ben Jackson is vice president of Government Relations for the Illinois Bankers Association

IBA, STATE ASSOCIATIONS CALL FOR INCREASED CREDIT UNION OVERSIGHT The IBA along with 50 other state bankers associations sent a letter to congressional leaders calling for a statutory review of the credit union industry’s mission of serving people of “small means.” The groups also called for a thorough examination of the National Credit Union Administration and its oversight of the credit union industry. The letter cites the recent Federal Financial Analytics report commissioned by the American Bankers Association detailing how credit unions are contributing to the economic inequality through their efforts to primarily provide services to high-income customers, make high risk loans, and purchase taxpaying banks.

Read the letter on our IBA Credit Union Resource page - www.ilbanker.com/ Advocacy/Credit-Unions COUNCIL FOR SOUND TAX POLICY: CREDIT UNIONS SHOULD SHARE TAX BURDEN The IBA also worked with a tax fairness group, the Council for Sound Tax Policy (CSTP), in publishing a letter to the editor in the Kankakee Daily Journal calling for an end to the credit union tax exemption. The letter compares the $12,000 in federal and state income taxes that an average Illinois family pays to the $0 in income taxes that a credit union pays and points to the sports stadium naming rights and exclusive sponsorship deals that credit unions purchase instead of paying income taxes. https://bit.ly/2Z3nOcI ADDITIONAL CREDIT UNION RESOURCES The IBA is dedicated to raising awareness of the credit union tax exemption to state and federal lawmakers. We have heard an unprecedented level of buzz from our efforts with lawmakers this year, and we ask you to help us continue the momentum and join our efforts by contacting your local lawmaker. For resources, check out the IBA’s Credit Union Resource page at www. ilbanker.com/Advocacy/Credit-Unions that includes a new study we commissioned this year, as well as talking points and a customizable letter to send to lawmakers. If you have questions and/or receive legislator feedback, please contact our Government Relations team via email – Ben Jackson bjackson@ilbanker.com or Aimee Winebaugh awinebaugh@ilbanker.com or call 217-789-9340.