Editor's Note: This story has been updated to include the link to the white paper.
MADISON, Wis.–CUNA has published an update to its annual white paper on the credit union tax status that again posits the tax exemption is one of the best investments the federal government has ever made.
CUNA chief economist Mike Schenk said the most important finding in the paper is again unrelated to numbers and calculations, but instead that credit unions maintain their unique structure and continue to help members to fulfill a provident purpose.
CUNA's "Credit Union Not-For-Profit Tax Status" white paper can be found here.
“The federal tax status that was created nearly 100 years ago continues to serve the purpose for which it was created and is and one of best investments the government has made,” said Schenk.
Schenk said the CUNA analysis shows the benefit of credit unions economically is approximately $16 billion annually, or eight times the amount credit unions would pay in federal income taxes were there no exemption. “That’s 800%, and there are few investments that return anywhere near that amount.”
Fund the Government–For Four Hours
Schenk said CUNA’s research shows taxing credit unions would provide no significant value to the federal government and would provide income to fund the government for four hours. Moreover, Schenk said credit unions already pay approximately $20 billion in various taxes annually, including $12 billion in federal taxes and another $7 billion in state and local taxes.
The nation’s 115-million credit union members pay approximately $1.5 trillion in state and local taxes, including on the dividends credit unions pay on deposits, Schenk added.
“New taxes would threaten the provision of these benefits and provide members with fewer benefits overall,” said Schenk. “It would mean trade-offs of very small tax revenue for increased risk in the credit unions system and fewer choices for members. We think it’s unfathomable the government would burden current taxpayers with more taxes.”
In addition, Schenk said tax breaks provided to banks in 2018 added up to approximately $30 billion, which is 15 times what the credit union tax exemption costs the federal government. “Banks have 90% market share, and that’s virtually unchanged over the past quarter-century,” said Schenk.