JPMorgan Chase & Co. (JPM), Wells Fargo & Co (WFC): Should Credit Unions Pay Taxes?

In the energy industry, there’s been a huge drive among ordinary corporations to restructure all or part of their operations to qualify for status as master limited partnerships. MLPs don’t have to pay tax at the entity level, instead distributing their profits, and leaving unitholders to bear any tax liability from their operations. Investors in ordinary corporations end up getting double-taxed, with the companies themselves paying corporate tax, and shareholders still paying individual taxes on dividends.

In that light, the tax-exempt status of credit unions doesn’t seem all that peculiar. Arguably, what’s unusual about banking is that more institutions haven’t moved to take advantage of the exemption. Credit unions still make up only a small fraction of the banking-services industry, with traditional banks having about 15 times the financial assets that credit unions hold.

Don’t fret about credit unions
For-profit banks might not like what they see as a competitive disadvantage against credit unions. But, given the benefits that larger banking institutions gain from their relative size, keeping tax-exempt status for credit unions doesn’t seem like an unfair way of keeping the playing field relatively level.

The article Should Credit Unions Pay Taxes? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of JPMorgan Chase and Wells Fargo.

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