Florida Banking November 2023

GOVERNMENT RELATIONS

STOP THE FLORIDA CREDIT UNIONS’ MILLION DOLLAR TAX SUBSIDIES BY ANTHONY DIMARCO, FBA EXECUTIVE VICE PRESIDENT AND DIRECTOR OF GOVERNMENT AFFAIRS

F lorida TaxWatch recently issued a detailed report on the million-dollar tax subsidy that credit unions enjoy in Florida. In summary, TaxWatch found that the Florida credit unions’ tax subsidy is as follows: • State taxes not paid annually - $101.8 million • Federal taxes not paid annually - $147.8 million • Local sales tax not paid annually - $9.4 million • The total of the annual tax subsidy is $259 million. You are reading that correctly – the

that purchase community banks inherit a diversified financial portfolio and customers. Most of these customers will not leave the resulting credit union once the purchase is complete. Moreover, the growth of non-tax-paying credit unions (either through organic growth or acquisition) complicates a government’s ability to improve tax conditions in other areas of need. For example, more credit union growth reduces tax receipts. This reduction may reduce a government’s ability to reduce

credit unions’ tax subsidy is more than $250 million a year. Wow!

or exempt taxes such has been done with seniors and first responders. I do not think this is what they had in mind when the credit union charter was granted a not-for-profit tax-exempt status. This begs the question, why are credit unions granted a not-for-profit tax-exempt charter? When they were first formed in the early 20th century, they were only allowed to work with a select employee group, such as teachers, plumbers, and the like.

“THE TAXWATCH STUDY FOUND THAT A FAMILY OF FOUR WILL PAY MORE IN TAXES THAN THESE MULTIMILLION-DOLLAR CREDIT UNIONS.”

None of these dollars are being used in your local communities to pay for roads, libraries, schools, or other local needs. None of these dollars are being used by the federal government for the defense of our nation or to reduce the national debt. Instead, these dollars are used for unfair competition in the financial marketplace. Furthermore, the

TaxWatch study found that a family of four will pay more in taxes than these multimillion-dollar credit unions. A family of four is estimated to pay more than $5,400 in taxes while these credit unions pay $0. It begs the question, why should a family of four pay more in taxes than a multimillion-dollar business? To further compound this inequity, the credit unions are using these tax subsidies to purchase community banks and removing them from the tax rolls. This will only exacerbate the unfairness. The credit unions

Over time, this was eroded away as credit unions sought more and more profits to pay management. Now, instead of being limited to a certain employee class and their immediate families, anyone may join a credit union if they live, work, or worship in a county with a branch in it or a customer gives a de minimis amount to a charity. The restrictions are therefore nonexistent. Now a mega credit union may have branches in most counties in Florida. One credit union, for example, has

12 — FLORIDA BANKING THE VOICE OF FLORIDA BANKING