In the next step of her ongoing support of credit unions, Rep. Linda Sanchez, D-CA, has written an editorial piece for the California and Nevada Credit Union Leagues flagship magazine, Credit Union Digest, and announced her support of the credit union tax exemption.
The Leagues’ legislative advocacy team has been working with Sanchez—a member of the House of Ways and Means Committee, which governs tax policy—discussing with her how credit unions play a vital role in the communities they serve.
In her editorial Sanchez talks of her introduction to credit unions at a young age, and the importance of retaining their tax status.
“Getting rid of their tax-exempt status would hurt credit unions and consumer choice, and drive up the cost of financial services for everyone,” Sanchez says. “That’s a bad deal for consumers. That’s an even worse deal for our communities.”
Below is Sanchez’ editorial in its entirety:
When I was 16 years old, I opened my first credit union account. I still have my first bank book. As a longtime credit union member, I understand the very special role credit unions play in our communities. Credit unions make it possible for small businesses to expand their operations and hire more employees. Credit unions make it possible for students to pursue higher education.
I am fortunate to represent 158,000 credit union members in California’s 38th Congressional District. These members include teachers, janitors, firefighters, and military personnel—the people who are the glue holding our communities together.
As a member of the House Committee on Ways and Means, the chief tax writing committee in Congress, I am committed to ensuring that our tax code helps protect middle class families. Reforming our tax code, something that last happened in 1986, will start in the Ways and Means Committee. I will be the first one to tell you that overhauling our tax code is long overdue. We need to reform our tax code in a way that supports American industry and hardworking Americans.
Above all, we need a tax code that provides economic certainty. Preserving the current tax-exempt status for credit unions would help provide some much needed certainty.
Congress has consistently supported the credit union federal tax exemption because of the special manner in which credit unions serve consumers. As nonprofit, member-owned and operated cooperatives, credit unions are focused on returning benefits to their members. That means higher savings yields and lower loan interest rates.
I believe it’s also important that we foster competition in the banking industry. Eliminating the tax-exempt status for credit unions would severely handicap the ability of credit unions to compete with the big Wall Street banks. More competition means more choices and better terms for consumers.
Credit unions have also been historically good stewards of their members’ finances. During the 2008 financial crisis, most financial institutions stopped lending money. Not credit unions. They increased their lending in order to give individuals and small businesses the lifeline they desperately needed. During the housing crisis, California credit unions addressed 80 percent of their delinquent loans, and less than half of 1 percent of those loans were foreclosed.
More than anything, credit unions look after working families. Southern California credit unions offer zero-percent interest loans, with no credit-checking for janitors or school food service employees who are required to buy their uniforms. Furloughed school employees are eligible for bill-pay assistance. Credit union members who have fallen on hard times have skip-a-payment options.
Credit unions provide crucial support to our families and communities. This support is why it is important that we preserve the tax-exempt status for credit unions. Getting rid of their tax-exempt status would hurt credit unions and consumer choice, and drive up the cost of financial services for everyone. That’s a bad deal for consumers. That’s an even worse deal for our communities.