SALT LAKE CITY–A poll conducted by a company here involved in public policy in Utah has found Utahans support eliminating the tax exemption for large credit unions, while keeping it in place for smaller CUs.
The results of the poll were released by UtahPolicy.com and its publisher LaVarr Webb, who acknowledge Zion’s Bank is a sponsor of the website but who also said it does not influence its editorial content.
The poll results were released at the same time the American Bankers Association has released its own study claiming a majority of Americans want credit unions taxed, as CUToday.info reported here.
In a posting on UtahPolicy.com, Webb wrote that the issue of the CU tax exemption has been before representatives in the state for more than a decade. Now that tax reform is being debated, he wrote the “issue is more relevant than ever” as Congress seeks to “create a level playing field for similar businesses to compete on even terms.”
“The problem today is larger than it was 12 years ago, as billion-dollar credit unions have further expanded, enjoying a major advantage as they compete directly with community banks that pay taxes to support education,” argued Webb.
Utah’s schools are funded, as is the case in many states, through local property taxes, state income taxes, and from federal sources. The web posting does not mention that Utah’s CUs are not exempt from paying property taxes.
Webb said UtahPolicy.com commissioned a Dan Jones & Associates poll to measure Utah citizen attitudes about the issue. The results of the poll conducted Nov. 21-22 among 602 registered voter respondents (with a plus/minus 4% possible error margin) are consistent with similar research done a “decade ago when this was a hot topic in the Utah Legislature,” according to the company.
UtahPolicy.com reported the survey asked, “If large credit unions are competing directly with community banks for the same customers, and are providing the same services as banks, do you agree or disagree that these credit unions and banks should be taxed equally?” and that 67% of respondents said they strongly or somewhat agreed that these financial institutions should be taxed equally. Twenty-eight percent disagreed.
Other findings, according to UtahPolicy.com:
- 72% of poll respondents said that if retained earnings of large credit unions are not distributed to members as dividends, then those retained earnings should be taxed, similar to the way bank profits are taxed
- 84% of respondents said credit union members should be allowed to vote on whether retained earnings should be distributed to members, or used for such things as expansion into new locations
- Some 75% of respondents said that if credit unions make large commercials loans, like banks do, then retained earnings or profits from those loans should be taxed, like profits from a bank would be taxed
Webb wrote that the poll showed that even among credit union members, “strong majorities support fair taxation of retained earnings of large credit unions that aren’t returned to members.”
According to Webb, if credit unions in the U.S. of more than $1 billion in assets were taxed like banks, it would generate $27 billion more in federal tax receipts overall. He wrote this only includes about 280 credit unions, or 5% of all CUs.
“In Utah, because all state income tax revenue is devoted to Utah’s schools, taxing just the large credit unions like banks would add about $11.2 million for education. That could provide a helpful raise to Utah’s teachers,” Webb wrote.