The Council for Sound Tax Policy (CSTP) has launched a #NoMoreFreeRides digital advertising campaign advocating to end the antiquated income tax exemption for big credit unions in Illinois.
The campaign coincides with a recent Illinois legislative change that culminates with a November 2020 vote to see if the Illinois Constitution should be amended to change the flat tax to a graduated income tax rate. With the state of Illinois facing a budget shortfall, the Council is concerned taxes could be raised on working families while big credit unions continue to operate without paying any income taxes.
"Regardless of where you stand on the graduated income tax proposal, the time is past due for credit unions to pay their fair share of taxes in Illinois," said Peter Prickett, CSTP chairman. "A major step in the right direction would be to tax the largest credit unions that tower over the majority of community banks in Illinois. Working families in Illinois would benefit by ending the tax-free ride of Illinois' largest credit unions."
Credit unions have evolved from their original mission and today compete directly with tax-paying community banks by offering the exact same financial products and services. While credit unions originally were created to serve people with common bonds and modest means, the industry has capitalized on its tax exemption to evolve into a $1.4 trillion industry nationally with a $46.4 billion footprint in Illinois.
Most consumers do not know the difference between a credit union and a bank, yet it is likely they would be less than thrilled to know they are paying more in taxes than an entire multibillion-dollar industry. While Illinois credit unions pay $0 in state or federal income taxes, the average family of four in Illinois pays almost $9,000 in federal income taxes and more than $3,000 in state income taxes each and every year.
Adding insult to injury, a Wisconsin credit union recently announced that it will purchase an Illinois bank. This will result in the elimination of a tax-paying business, further evidence of the credit union industry's abuse of its nonprofit status.
"It's time to end the unfair free ride for big credit unions," Prickett said. "Illinois taxpayers have subsidized the nation's largest credit unions long enough. Let's level the playing field by ending the unfair tax exemption for Illinois' big credit unions."
Learn more about CSTP at www.soundtaxpolicy.org.