Letter: Banks mustn't rule credit unions
Regarding "Credit unions don't pay fair tax share" [Letters, Dec. 13], as a lifelong credit union employee, I remember in the mid-1970s when the National Credit Union Administration first empowered credit unions to offer checking accounts. The American Bankers' Association sued, making a similar argument about unfair competition and the need for credit unions to pay income taxes.
Much as it wasn't for banks to decide what credit unions can or cannot do then, it is also not up to banks now to determine who pays what in taxes. Credit unions' exemption from income taxes was granted based on our structure as member-owned entities. Credit unions pay dividends to their members who, in turn, pay income taxes on those dividends.
Banks are in business to make money for their stockholders. Their customers provide a source of income to pay those stockholders. Credit unions are restricted in how they generate revenue. They cannot invest in stocks or corporate bonds. Credit unions do, however, pay payroll and real estate taxes.
The Teachers Federal Credit Union recently celebrated its 60th anniversary. Yes, it is a large credit union, and it has taken 60 years to reach $4 billion in assets.
The letter writer states that credit unions avoid paying $31 billion a year in income taxes. The net profit of credit unions was $6.4 billion in 2011 and $4.2 billion through June of this year, so I don't see how income taxes could amount to $31 billion.
If credit unions have such a competitive advantage, I have to ask the letter writer, a banker, why it is that after all these years he has not started a credit union, or converted his bank to one?
Robert G. Allen, Hauppauge
Editor's note: The writer is the chief executive of the Teachers Federal Credit Union.