WASHINGTON—The Congressional Budget Office last month put out a report looking at the possible advantages of taxing large credit unions.
In its Budget Options report, option 27 is taxing large credit unions’ retained earnings as thrifts, which could bring in $800,000 for 2006 and as much as $15.2 billion between fiscal years 2006 and 2015. The report noted that, originally, the retained earnings of credit unions, savings and loans, and mutual savings banks were all exempt from taxes. However, thrifts and savings and loans were determined to be behaving too much like their for-profit counterparts in 1951 and lost their tax exemption.
“Since that time, large credit unions have come to resemble other thrifts. Beginning in 1982, credit union regulators have allowed credit unions to extend their services (subject to some restrictions) to members of organizations other than the ones for which they were founded. In addition, most credit unions allow members and their families to participate even after a member has left the sponsoring organization,” the report read. It states that large credit unions, like thrifts, now serve the general public and offer many of the same services.
Arguments for taxing credit unions include improving efficiency, according to the report, but many credit unions remain more like cooperatives and should be treated as such.