On behalf of the credit unions of New York state and the 4.2 million members who have chosen to put their monies in these institutions, I would like to respond to Mark Buckingham's letter to the editor on taxing credit unions the same as banks.
If Mr. Buckingham had done his research, he would have known that credit unions do pay taxes, including property and employer taxes. They do not, as Buckingham states, "operate without any tax liability whatsoever." Credit unions are exempt from federal income taxes because as not-for-profit financial cooperatives, they return all earnings to their members in the form of dividends and enhanced services.
In contrast, banks are required to pay corporate income tax because they are in the business of returning profits to paid board members and outside stockholders, not their customers.
Every taxpayer benefits from credit union presence in the marketplace — they help drive down costs and fees associated with banking.
Credit unions are local, member-owned, democratically controlled organizations that represent a distinct financial alternative that individuals elect to join. They are governed by a volunteer board of directors, whereas most banks compensate their directors for serving on the board.
While credit unions provide many of the same services as banks, their core values and structure are very different, regardless of the credit union's asset size or products and services. Credit union members aren't customers; they're owners, each with an equal vote in determining the direction of the credit union.
Credit unions do not engage subprime lending and rampant loan origination without regard to credit risk that is at the core of the current financial crisis. Consumers looking for a safe harbor during both good and bad times need not look any further than their local credit union.
In fact, the practices of credit unions should be viewed as a model for ensuring the financial safety of all Americans. Since their beginnings a hundred years ago, credit unions have weathered every financial storm since the Depression of the '30s without ever costing taxpayers a penny or compromising members' deposits. Credit unions are not part of today's financial problems, but they are playing a part in the solution.
New York credit unions have assets of more than $43 billion and 4.2 million members. To learn more about credit unions visit www.CreditUnionsForYou.com.
William J. Mellin
The writer is president/CEO of Credit Union Association of New York.