WASHINGTON – Ending credit unions’ federal tax exemption would cost the country billions in lost revenue and jobs, according to a study commissioned by NAFCU and released Wednesday during the trade group’s Congressional Caucus.
Research presented in a report – titled “Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy” – found that loss of the credit union tax exemption would cost the federal government $15 billion in lost tax revenue, $148 billion in GDP, and 1.5 million lost jobs over the next decade.
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“This study shows how vitally important credit unions are to all Americans, not just those who are members of a credit union,” said NAFCU CEO Fred Becker. “It is clear that the benefits of the credit union tax exemption are a great boon to our overall economic welfare and prosperity and that its preservation should be of the highest priority.”
Researchers found that consumers benefited by $10 billion per year because credit unions are exempt from federal taxation and that, counter intuitively, taxing credit unions would result in a net tax loss of $1.5 billion because of the loss in consumer income from fewer credit unions in the marketplace, NAFCU said.
The study also found that bank customers benefit from credit unions as well because of increased competition keeping rates low, the trade group said.
The total cost to bank customers if there were a 50% reduction in credit union market share ranges from a low of $2.4 billion to a high $6.3 billion per year over the period 2005-2011 in higher loan rates and lower deposit rates, totaling almost $30 billion, the trade group said its research showed.