The President's Perspective
by Jeff Olson

Greetings and Happy #TaxDay!

Today is April 15th or Tax Day, and more than likely we will see a number of targeted, inaccurate attacks on the credit union tax status by the for-profit banks across our region, as we have in other years. Despite the bankers’ claims, credit unions’ tax status is based on their mission and structure, two things that have remained unchanged from the beginning of the credit union movement.

Just for fun, let’s review the facts again. Credit unions are 100% member-owned, which distinguishes them from every other class of financial institution. This structure means member-owners are who the credit union answers to, and where credit union profits go.

Credit unions do pay taxes, including employer, employee, excise, property, motor vehicle and sales tax. Our 115 million members nationwide, including our 494,000 members here in the Dakotas paid an estimated $1.5 trillion in state and federal taxes in the most recent federal tax year.

The very same credit union tax status that is continually coming under attacks is responsible for $16.4 billion in consumer benefits in 2018 alone, a number vastly larger than any supposed “benefit” that would come from taxing credit unions. That’s $16.4 billion in 2018 that went to buy homes and cars, start small businesses, pay for education, or anything else consumers choose.

Here in the Dakotas, that equates to $25.5 million in direct benefits to South Dakota members and $20.5 to North Dakota members. That equals a savings of $193 per year for each member household in South Dakota. In North Dakota, the savings per member household is $210 per year.

Let’s break that down even further. Financing a $25,000 new vehicle for 60 months in the Dakota’s will save a credit union member over $750 over the life of that loan.

Let’s not mince words. Changing credit unions’ tax status would be a tax increase on 115 million Americans and 494,000 Dakota credit union members. That’s a tax increase that wasn’t even on the table during last year’s tax bill negotiations, because both Democrats and Republicans know it’s a bad idea.

Here are some more facts, in case your friendly neighborhood banks call for the removal of the credit union tax status.

  • Banks control 89.7% of deposits in North Dakota.
  • Out-of-state banks control 21% of total bank deposits in that state.
  • Banks control 99.5% of deposits in South Dakota.
  • Out-of-state banks control 95.9% of total bank deposits in that state, a share that has increased by 50.5 percentage points over the past two decades.
  • Big banks have aggressively expanded market share and represent the biggest competitive challenge to small institutions.

Here’s one more thing to consider, in Australia, credit unions are subject to the same tax structure as the largest banks. It's a significant challenge for the industry, one that CUNA and your League is fighting hard to ensure doesn't happen in the U.S. For us, it's a constant education campaign. We have to share our difference with policymakers and make them understand why our not-for-profit model should be taxed differently than banks.

As part of this effort, there are a number of resources for members that help you debunk these attacks and define the debate on our terms. Last week CUNA released a white paper on the credit union tax status. It details the ways Americans and Dakotans benefit from credit unions and the damage that would result from any change in our tax status. Also, as we brought to your attention through the Memo and through a direct email to all CEOs from Jay Kruse last week, there toolkits for your credit unions to use as you talk about why we're taxed differently by design.

We can set our own narrative about the tax status of credit unions, and we don’t have to wait to respond to bankers’ attacks to do it. I encourage you to post, like, and share the memes that are available in the toolkit (shown below) today, April 15th, #TaxDay.

Countdown to CUAD Summit – 14 Days!

We are just two weeks out from the 2019 CUAD Summit, our annual signature event. Registration has been steady and we’re looking forward to hosting nearly 200 credit union professionals, crashers, and volunteers in Fargo, April 29-May 1 at the Delta Hotel and Conference Center. It’s not too late to register and join us some of the best speakers and leaders in the industry! This year’s Summit will be focused so our attendees gain insight on the credit union movement here in the Dakotas, providing updates on advocacy, credit union awareness, and opportunities to industry partners on tools and resources that will help you better serve your members. We also have some great entertainment planned, including our annual golf outing, the Awards Banquet, the Irish Auction and a great comedian! Be sure to register no later than April 18th – that’s Thursday this week.

Credit Union Foundation of the Dakotas to host pre-conference wine tasting fundraiser.

Since many of you will be coming to Fargo on Sunday so you are ready for the Monday activities, the Credit Union Foundation of the Dakotas will be hosting the first annual Wine Tasting Fundraiser on Sunday, April 28th from 6:00 – 8:00 p.m.

This sensory event will feature approximately 20 different fine wines, covering a broad spectrum from white to red, sparkling, and everything in between. The wine tasting will be enhanced with pairings from Luna Fargo, including a variety of cheeses, nuts, fruits, crackers and bread all selected to enhance the special notes of each wine. Want more than just a sample? There will be a Special Reserve wine table with select varietals, so you may purchase a full glass to enjoy. Each attendee will also receive a wine-themed token of appreciation for their support.

First Community Credit Union located at 5201 42nd St S. in Fargo has generously offered a welcoming space to host this elegant event. In addition, FCCU staff and Foundation board members will be available to give rides back to the hotel following the wine tasting, so everyone may enjoy a safe and fun evening!

Tickets for this gathering are just $75 for one or purchase two for $125. All proceeds from our fundraising efforts go to the CUFD to help credit unions make a difference through children’s charities, financial education, scholarships, and community outreach programs.

We really hope you can attend. You can sign-up for the CUFD Wine Tasting event by contacting Debbie Kruckenberg at 701-250-3924 or simply select the option when you register for the Summit.

Directors College an educational success.

Despite the “bomb cyclone” that blanketed most of the Dakotas late last week with several inches of heavy snow, high winds and icy and dangerous roads, our first CUAD/NASCUS Directors College was successfully launched in Fargo. Unfortunately, the weather did have an impact on our attendance, as nearly half of our registrants were unable to travel for the training. Those that were able to attend were treated to a high-level seminar that focused on director expectations, including regulatory requirements, cyber security concerns, succession planning, interest rate risk, planning and succession, and other critical issues impacting credit unions today. We will be looking at adding another Directors College to our 2020 educational calendar, as our members have been asking us for this type of specific training.

Have a great week!




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