Around 3 million Arkansans are busy preparing their tax returns. The income from these taxes will pay for education, law enforcement, hospitals and responses to disasters — just to name a few services. In 2017, Arkansas banks paid $503,016,000 in taxes, which contributed to these endeavors. Credit unions paid $0.
How much does this cost Arkansas? With more than $1 billion in assets, the largest credit union in Arkansas is being subsidized by about $2.3 million annually by Arkansas taxpayers. And that is only one Arkansas credit union. Allowing credit unions to take public deposits would only work against the state by reducing the state’s tax base as well as leaving less capital in community banks for lending to small businesses and consumers.
This is an Opinion
Credit unions were given tax-exempt status by Congress to make credit available to people of modest means. Credit unions have had 90 years to complete this mission. What does that look like in Arkansas? In 2016, only 4 percent of mortgages originated in Arkansas went to low-income borrowers. In addition, when it comes to small business, as of 2016, Arkansas banks had over $27 billion in outstanding small-business loans as well as $1.7 billion in small-farm loans. These loans drive small-business and bank tax dollars back into the Arkansas economy.
Arkansas community banks invest in our state, employing 26,750 Arkansans, providing $1.6 billion in compensation and benefits and donating 122,744 volunteer hours annually. Look around your hometown, and chances are you will see many projects where your community banks have invested funds, time and talent.
If credit unions want to stray from their mission and act like banks, they should be taxed like banks.
Executive Director, Arkansas Bankers Association