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WASHINGTON, D.C. — America’s Community Bankers, the national trade association for community banking institutions, has urged the major presidential candidates to revisit their support for continuing the unfair tax exemption for credit unions.

In letters to Gov. George W. Bush and Vice President Al Gore, ACB President Diane M. Casey said community bankers were “deeply disappointed” that the candidates had taken a “premature public policy position without any input from taxpaying community banks.” Both Bush and Gore recently went on record in support of maintaining credit unions’ tax exempt status.

“On behalf of the nation’s community banks, I urge you to revisit your position and learn more about this issue before accepting credit union dogma,” said Casey. “You should consider all viewpoints while crafting a position that represents sound public policy and is fair to all competitors in our banking system and is fair to the American taxpayer.”

ACB believes there is no longer justification for the tax subsidy of credit unions that compete head-to-head with community banks. The tax exemption is unfair to community banks and other depository institutions, as well as to all taxpayers, who pay $1 billion a year to fund the credit union subsidy. The unfairness is exacerbated by the fact the credit union industry’s own survey reveals that credit union customers are more affluent than the average citizen.

“The nation’s community banks pay far more than their fair share of taxes and are subjected to a regulatory burden that credit unions have never known and would not tolerate,” Casey said.

“Even in an environment of budget surpluses, do we really want to burden taxpayers with a $1 billion subsidy to credit unions that serve the more affluent customers while lobbying Congress to ensure that they remain the only federally-insured depository institutions that do not have any Community Reinvestment Act obligations to serve all parts of their communities, including low- and moderate-income families?” asked Casey.

In earlier years, mutual savings institutions, which have many similarities to credit unions, were tax exempt. But the tax exemption of mutual thrifts was revoked in 1952, when they had far fewer powers than credit unions have today. “Credit unions pay no taxes, regardless of their business activities,” she said.

ACB maintains that credit unions deserve a thorough review to determine if they are operating as credit unions in “name only.” These are credit unions that should have the same tax requirements that apply to banks because they are diverse financial services companies, operating across broad geographic and demographic areas and selling a wide range of products.

ACB’s letter is linked