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Scott Earl: Arizona’s credit unions are for people, not profit

Scott Earl: Arizona’s credit unions are for people, not profit

I’m writing to respond to the Dec. 2 guest column headlined “Outdated rule gives credit unions unfair tax advantage over banks.”

Arizona’s credit unions are both not-for-profit and cooperatives. Like all cooperatives, credit unions are member-owned and self-governed by the Arizonans who use our services. By definition, all credit union funds are reinvested into the families and communities that we serve — not sent to shareholders like for-profit banks.

Arizona’s credit unions do pay taxes, including property tax, sales tax, moneys and credits tax and employer-related taxes. Increasing the taxes already paid by credit unions is merely an increased tax on Arizona’s credit union members.

From their inception, credit unions have been nonprofits not only because they offer service where it has been lacking or withdrawn, but also because they are cooperatives owned by every account holder. In their boardrooms are member representatives making each decision — including compensation — to the benefit of the credit union’s membership rather than stockholders.

Credit unions improve the financial lives of consumers and provide clear benefit to Arizona communities. Last year, more than 1.5 million Arizona credit union members saved more than $142 million in better rates and lower fees than they would have at banks. These benefits are equivalent to $95 per member.

Government data shows that Arizona credit unions approve 61.4 percent of total mortgage applications from low/moderate income borrowers. Contrary to what Arizona bankers would have you believe, the state’s low/moderate income consumers should include credit unions in their mortgage shopping plans because they’re more likely to get the loan they want at a credit union.

The credit union tax status benefits all consumers — credit union members and nonmembers alike — to the tune of $14.2 billion a year nationally. The existence of credit unions in the marketplace is beneficial to every American because it makes bank pricing more consumer-friendly than it would were credit unions not an option. Credit unions aren’t turning a profit to fatten the pockets of bank shareholders — they’re returning earnings to their members in the form of better rates and lower fees. The more competition in the market, the better for consumers.

The true value of potential taxation revenue is in its impact on the people those taxes are to serve. For every dollar the federal government could collect from credit unions, the not-for-profits provide nearly six times that in financial benefits to members.

Credit unions are Americans’ best option for financial services, and the credit union tax status represents one of the best investments that the government makes in its citizens. An additional tax on credit unions would be a one-two punch: a new tax on middle-class families and less pro-consumer competition in financial services. It’s hard to see the public benefit in that.

We are proud that more than 1.5 million Arizonans own credit unions and, through our cooperative governance, have improved the financial lives of generations of Arizonans. Congress has preserved the credit union tax structure since it was enacted in 1937.

We remain true to our guiding philosophy, one that earned our existing tax status — credit unions are “not for profit, not for charity, but for service.”

Scott Earl is president and CEO of Mountain West Credit Union Association.

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