NAFCU said Thursday that killing the credit union federal tax exemption would cost Americans an estimated $17 billion in economic benefits a year.
Over the next decade, the trade group’s new study said, that would total $15 billion in lost tax revenue, $148 billion in gross domestic product and 1.5 million jobs lost.
Protecting the tax exemption tops the priority list of both major credit union trade groups as tax reform proposals work their way through Congress.
“The data presented in NAFCU’s tax study illustrates the importance of the credit union business model within the U.S. economy,” NAFCU President/CEO Dan Berger said in a release. “It shows the necessary competitive edge credit unions bring to the financial marketplace that benefits all Americans, regardless of whether they obtain their financial services from a credit union or a bank.”
NAFCU said the study – titled “Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy” – was co-authored by Robert Feinberg, professor of economics at American University, and Douglas Meade, director of research at Interindustry Economic Research Fund Inc.
Using data from 2005 to 2013, the researchers found:
- A 50% reduction in the credit union market share would have cost bank customers an estimated $7.6 billion to $16.2 billion per year over the nine-year period due to higher loan rates and lower deposit rates in the absence of credit union competition.
- Credit union members realized $51.5 billion in benefits due to credit unions’ lower interest rates on loans and higher rates on savings.
- The total benefit to U.S. consumers from credit unions’ presence in financial markets was $153 billion from 2005 to 2013 – or $17 billion per year.
On a state-by-state basis, NAFCU said, the largest annual estimated benefits were $17.9 billion in California, $15.6 billion in New York, $10.9 billion in Texas, $7.3 billion in Florida, and $5.9 billion in North Carolina.