SACRAMENTO, Calif.—Bankers did not wait long to take another swing at credit unions’ tax exemption following Golden 1 Credit Union securing naming rights to the arena being built here that is to be home to the NBA’s Sacramento Kings.
The CU reportedly is paying $120 million over 20 years. CUToday.info was the first to report the deal.
In an editorial in the Sacramento Bee Wednesday, Rodney Brown, president and CEO of the California Bankers Association, stated that $6 million annually for the “right to have your name in bright lights on a sports arena is a sizable amount of money, but for a ‘nonprofit’ corporation that pays zero dollars in state or federal income tax, it’s probably not too much of a stretch.”
Brown asked how it’s possible that an individual Californian pays more taxes than the $9-billion Golden 1, and then addressed the CU tax exemption.
Calling the credit union exemption a “Depression-era tax break that has long outlived its purpose,” Brown said CUs have leveraged their taxpayer subsidy to “aggressively grow into a $1-trillion industry, at the expense of all taxpayers. There are now 208 credit unions with more than $1 billion in assets – 36 are headquartered in California.”
Brown explained that based upon the asset size and net income of the large California-headquartered credit unions, their annual state tax contribution, if they had one, would be more than $111 million.
“Nationwide, the annual cost to U.S. taxpayers is approximately $2 billion in uncollected federal taxes from the entire credit union industry, funds that could be used to support our military and the needs of our senior citizens and children,” wrote Brown.
Brown pointed out that during the naming rights press conference, Golden 1 President and CEO Donna Bland “used the opportunity to advertise for new members, to add to their 720,000 existing members, directly proving the point of how outdated the credit unions’ tax-preferred status is. Anyone who lives or works in 34 of California’s 58 counties can join. She spoke of the free checking, low auto loan and mortgage rates available, and announced new benefits members can take advantage of at the new arena, including discounts on Kings merchandise and advance access to ticket sales, courtesy of their tax-exempt status.”
Brown concluded that there is no longer any valid reason why “these large, bank-like credit unions should retain their tax exemption.”
CUToday.info contacted Golden 1 to discuss the sponsorship, however, the CU has not responded.
In the Q&A on its website, Golden 1 says, in response to a question about why it is making the $6-million-a-year expense, “While our local community knows about our superior service and commitment to serving members, the Golden 1 brand has the potential to help people across the state learn more about the financial benefits of being a credit union member. We believe the partnership with the Sacramento Kings and visibility Golden 1 will earn as the naming rights partner for Golden 1 Center, will allow us to grow and pass along the benefits to current and future members.”