Saturday, September 15, 2012
Reed White (J.D. 2012, Georgia State), Note, If It Quacks Like a Duck: In Light of Today's Financial Environment, Should Credit Unions Continue to Enjoy Tax Exemptions?, 28 Ga. St. U. L. Rev. 1367 (2012):
This Note examines the debate over the federal income tax exemption granted to credit unions, along with Georgia's decision to exempt federal and state-chartered credit unions from its intangible mortgage tax. Part I provides an overview of the history of credit unions and the underlying rationale for their federal income tax exemption, including several court decisions regarding federal credit unions' exemption from state taxation. Part II considers the merits of the arguments both for and against the tax exemption, while also addressing whether credit unions are fulfilling their obligation to provide credit to “low-income” borrowers. The analysis in Part III focuses on a recent New York state court decision, Hudson Valley Federal Credit Union v. New York State Department of Taxation & Finance, which provides persuasive authority should Georgia decide to repeal the intangible mortgage tax exemption currently granted to credit unions. Finally, Part IV proposes that Congress should withdraw the federal income tax exemption for those credit unions that are unable or unwilling to verify fulfillment of their mandate to support low-income members, while also arguing that the legislative history regarding thrift institutions should be used as a historical model for such a withdrawal.