WASHINGTON—Recognizing the growing and impending threat to credit unions’ tax exemption, the Defense Credit Union Council is rallying support from its members to send letters to Capitol Hill about why the tax break should be preserved.
As CUToday.info reported, The House Ways and Means Committee held a 20-minute discussion on the credit union tax exemption during yesterday's luncheon.
“As a result, there are several indications that the credit union tax exemption is at risk. This is a direct threat to the future of defense credit unions and the millions of service members, veterans, and their families who rely on our institutions for safe, affordable financial services,” said DCUC Chief Advocacy Officer Jason Stverak.
In its alert to members, DCUC emphasized the importance of credit unions taking action now.
“We need your help to send a strong, united message to Congress that the credit union tax exemption must be protected,” DCUC stated in its message.
The alert included a sample letters for credit union CEOs, CU staff and members.
The letters state that eliminating or altering the tax-exempt status of credit unions would have serious negative consequences:
1. Higher Costs for Consumers: Credit unions use their tax savings to offer lower loan rates and better deposit yields. Losing this exemption would force credit unions to raise fees and reduce benefits to compensate for new tax burdens.
2. Reduced Access to Credit: Many members, including small businesses, first-time homebuyers, and those with modest incomes, depend on credit unions for affordable financing. A new tax burden would limit our ability to lend, making it harder for families and businesses to access the credit they need.
3. Community Impact: Credit unions reinvest in their communities through financial education, local partnerships, and support for military and veteran families. Taxing credit unions would reduce our ability to provide these essential services, weakening local economies.
4. Unfair Advantage for Big Banks: Banks, which generate billions in profits and receive their own tax advantages, are pushing for credit unions to be taxed to eliminate competition. However, unlike banks, credit unions operate solely for the benefit of their members and do not generate stockholder dividends or executive bonuses.
“Time is of the essence,” Stverak said. “The House Ways and Means Committee is moving quickly and will resume discussion on how to pay for the tax relief bill at their retreat this Monday and Wednesday. We must ensure our elected officials understand that taxing credit unions will harm the very people we serve, our nation's military personnel, veterans, and their families.
As CUToday.info reported, Wednesday DCUC sent a letter to the Senate Finance Committee and the House and Ways Committee defending the credit union tax status.