Did you know the very first credit union opened its doors in Germany in 1880 in an effort to help poor and working class citizens so they didn’t need to turn to other scrupulous methods to get help.
Something you probably do know is that credit unions are not-for-profit financial cooperatives (that means as a member, you are an owner!) that serve the needs of their members by delivering benefits in the form of higher savings returns, lower rates and less fees. Sounds like a good deal to me! Now I know what you are thinking, what is different from a credit union to a bank? Well credit unions are insured and regulated just like banks are, but banks are controlled by shareholders and exist to basically make money for those shareholders. Credit unions on the other hand, exist to provide members with safe and affordable financial services.
It doesn’t matter if we are talking about Voyage FCU right here in Sioux Falls or another CU here or in another state or region, we are all driven by the same mission and structure regardless of size, services offered or location – People Helping People.
Another difference between banks and credit unions has to do with tax structure and many big banks think those structures are unfair to the big banks. The Credit Union National Association recently shared some really great insights into just this and I wanted to share with you here because it is always important to make sure we are getting the full and accurate information.
Given the very different organization and incentive structures between credit unions and banks it makes sense that they wouldn’t be subject to the same rules and regulations. But banks don’t see it this way. At least not when it comes to taxes.
Credit unions do not pay federal income taxes because they are not-for-profit. They do pay other federal, state and local taxes.
Taxing credit unions would yield enough money to run the government for about 4 hours. That’s not a lot of money when you compare it to the nearly $30 billion tax break banks got in 2018 alone from the Tax Cuts and Jobs Act.
Credit unions are a driving force in the national economy, contributing to communities in every state by helping one member at a time. Whether it’s the starter home for newlyweds, small business loan in a regenerating neighborhood or line of credit when that rainy-day hits, credit unions provide more affordable services without the risks and profit incentives that come with banks.
The credit union tax status is one of the best investments that the government makes in its citizens. Every day credit unions earn it by working hard to serve their members and fulfill the mission Congress has given them. – Ryan Donovan, CUNA
Next time you hear someone talking about the unfairness of the tax structures between banks and credit unions you will be armed with some great information to dispel those myths!