COINS bank charges for them?

[coveredbridge]

Slightly off topic, but:

"Billions of dollars are added to the national debt each year to subsidize credit unions. So, why aren't they paying taxes like every other type of financial institution?"

That's a great question for your Congressman and Senator.

 

[coveredbridge]

$4.6 billion in profits for the whole USA is not a big amount of money. Consider that last year J. P. Morgan Chase (the same bank that just squandered $2 billion of depositor's money) earned a profit of $5.6 billion last year, and that's just one bank. And if you expect anyone to work for free, dream on. Can you name one credit union employee who makes more that $1 million a year? Commercial banks have thousands of them.

I don't know for a fact that all credit unions are nonprofit. Mine is. I do know that if they make a profit they have to pay corporate income tax just like any other business.

Meanwhile, my credit union gives me free checking, free ATM use, and reimburses me up to 10 ATM fees from other banks, plus pays 4% interest on the first $5000 balance in my checking account. They offer a Visa card with a flat 10% interest rate and no annual fees. The current rate for personal loans is 2.4%. Instead of bilking the customers and raking off obscene profits and salaries, they provide exceptional service. Face it, any bank should pay you for keeping your money there. Without you, they are out of business. Instead, they charge ridiculous fees, like charging you to run coins through their coin counting machine.

I will say that before I moved to this area I banked at a small local savings and loan that had very similar service to the credit union I use now.

Would you mind sharing the name and location of your credit union?

 

[ultrarunner]

Slightly off topic, but:

"Billions of dollars are added to the national debt each year to subsidize credit unions. So, why aren't they paying taxes like every other type of financial institution?"

Billions of dollars are added to the national debt because our elected officials continue to spend without limits. Buying votes with other peoples' money; what a deal!

Any details on how Credit Unions are adding Billions to the debt?

Honest question I would like to learn more about.

 

[coveredbridge]

Any details on how Credit Unions are adding Billions to the debt?

Honest question I would like to learn more about.

In 1937 Congress granted credit unions with a federal tax-exempt status based upon their cooperative structure - that they are operated entirely by and for their members. Each year credit unions earn billions of dollars in profits on which zero federal income tax is paid. Since no federal income tax is paid on these profits, the federal government borrows more than they otherwise would if these profits were taxed. Hence, by not paying federal income tax on billions of profits each year, credit unions add to the national debt that is owed by every American.

 

[rsewill]

In 1937 Congress granted credit unions with a federal tax-exempt status based upon their cooperative structure - that they are operated entirely by and for their members. Each year credit unions earn billions of dollars in profits on which zero federal income tax is paid. Since no federal income tax is paid on these profits, the federal government borrows more than they otherwise would if these profits were taxed. Hence, by not paying federal income tax on billions of profits each year, credit unions add to the national debt that is owed by every American.

But any profit is distributed to the credit unions members which is taxed via the members' returns. Or they charge lower fees so that they make no profit.

 

[coveredbridge]

But any profit is distributed to the credit unions members which is taxed via the members' returns. Or they charge lower fees so that they make no profit.

All financial institutions, including credit unions, must maintain capital reserves in order to ensure that they can continue to operate in the event that they experience a period of operating losses. If financial institutions did not maintain capital reserves, they would have to close their doors if they incurred any unexpected operating loss. The only significant source of capital reserves for credit unions is net profits that are added to capital reserves (retained earnings). Since these earnings are retained, they cannot be distributed to members. Credit unions retained $4.6 billion of these profits in (2009?) as additions to capital reserves. These profits can't be paid out to members.

However, even if you were correct that these profits were distributed to members and subject to individual income tax, how would this be any different than dividends paid by banks out of their net profits to their shareholders after being taxed as corporate net income?

 

[big e]

So a guy walks into a bar with a nasty shiner.
Bartenders says, what the heck happened to you?
Guy says, I called my girlfriend a two-bit *****.
Bartender says, what'd she hit you with.
Guy says, A FREAKIN' SACK OF QUARTERS!

 

[rsewill]

All financial institutions, including credit unions, must maintain capital reserves in order to ensure that they can continue to operate in the event that they experience a period of operating losses. If financial institutions did not maintain capital reserves, they would have to close their doors if they incurred any unexpected operating loss. The only significant source of capital reserves for credit unions is net profits that are added to capital reserves (retained earnings). Since these earnings are retained, they cannot be distributed to members. Credit unions retained $4.6 billion of these profits in (2009?) as additions to capital reserves. These profits can't be paid out to members.

However, even if you were correct that these profits were distributed to members and subject to individual income tax, how would this be any different than dividends paid by banks out of their net profits to their shareholders after being taxed as corporate net income?

I feel sorry for Big Banking having to pay taxes on their earnings while credit union owners (the people who have accounts) don't have to. At least I'll try to have some pity. Those retained earnings are statutory but any excess is distributed or is reflected in lower fees.