All 52 state bankers associations including the Massachusetts Bankers Association have penned a letter to Sen. Orrin Hatch (R-Utah), the chairman of the Senate Finance Committee, praising his efforts to fight the credit union tax exemption.

Community banks have long argued that credit unions should not be exempt from corporate income taxes.

“There is no reason why the largest credit unions, which act and look just like the taxpaying banks they compete with, should be completely free of income taxation,” the letter stated. “This creates a market distortion where the tax code effectively subsidizes one financial services entity (the largest credit unions) over another (the smaller community bank).”

Earlier in February, Hatch, who is retiring once his term ends, sent a letter to National Credit Union Administration Chairman Mark McWatters about why the credit union tax exemption should be eliminated.

“I am concerned that the credit union industry is evolving in ways that take many credit unions further from their original tax exempt purpose,” Hatch wrote. “Recent actions by the National Credit Union Administration have further relaxed field of membership constraints, opened the door to the use of alternative capital, and lifted limits on other activity, such as business lending, which has traditionally been less associated with the mission of tax exempt credit unions. While these may be worthwhile pursuits, they should give us pause and cause a reflection on the core mission of credit unions and their tax exempt purpose.”

Hatch’s letter was met with a swift response from the major credit union advocacy groups.

“The credit union tax exemption has long provided a tremendous value to credit union members and the overall economy of the United States,” Carrie Hunt, executive vice president of government affairs and general counse at the National Association of Federally-Insured Credit Unions, wrote in a statement. Hunt a study the NAFCU commissioned last year that found the credit union tax exemption provides a $16 billion per year benefit to the U.S. economy.

“As the only depositor-owned, democratically controlled option in financial services, credit unions’ mission is to promote thrift and provide access to credit for members, particularly those of modest means,” Jim Nussle, president and CEO of the Credit Union National Association, said in a statement. “That’s a mission they have fulfilled for more than 70 years, through multiple financial crises, and it’s a mission that remains unchanged today.”