Your state’s tax dollars are less than they should be. How is that? One simple reason is that, for years, our state Legislature has exempted credit unions from paying income taxes. For many years, credit unions focused on their original mission, that of serving people of modest means, a service that merited their tax-free status.
Over time, several credit unions chose to abandon their original mission and to expand their field of membership well beyond the original tight membership bonds. Their expansion and rapid growth are being aided and abetted by their tax-free status. Such status has enabled them to make loans at lower rates than banks and to attract deposits by paying more for those deposits than banks might normally pay.
Credit unions like to refer to themselves as not-for-profit institutions. That is not true. They are, in fact, very much for-profit institutions. They are simply non-taxed institutions. The state’s largest credit union made more than $10 million in profits in 2018 and has accumulated well over $100 million in untaxed profits over time. How many businesses do you know that make more than $10 million per year and pay exactly zero in taxes?
The credit unions, in an effort to rally support for Senate Bill 257, which will allow the state and municipalities in the state to make deposits in credit unions, have hung their hat on the issue of fair competition with banks. Really? How can anyone conclude that institutions that don’t pay taxes wouldn’t have a significant advantage in competing with institutions that do pay taxes?
If the credit unions are really concerned about growing our state’s tax revenues, they should man up and compete fairly by paying their fair share of taxes along with the other taxpaying institutions in our state. Our state could use a boost in revenue for education, health care, police protection, prisons, etc., and ending the income tax subsidy on credit unions would be a great way to get that boost.
Do your part by contacting your senator and encouraging him or her to vote against SB257 and telling your senator that only when credit unions pay state income taxes should those credit unions be allowed to accept state and municipal funds for deposit.
Larry Wilson
CEO, First Arkansas Bank & Trust
Jacksonville
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