WASHINGTON—NAFCU has a message to lawmakers on Capitol Hill it said is meant to “set the record straight on credit unions and the credit union difference,” after a banking group made taxing credit unions one of its priorities for the 118th Congress, adding that “it is unfortunate” that this continues to occur.
Both the American Bankers Association and the Independent Community Bankers of America (ICBA) list the elimination of the credit union tax exemption as one of their top priorities with each new Congress.
In the letter NAFCU Vice President of Legislative Affairs Brad Thaler noted that while banks fight to remove credit unions’ tax exemption, “they fail to disclose that the banking industry receives tens of billions of dollars in annual tax breaks themselves.”
“They also fail to point out that nearly one-third of all banks are Subchapter S corporations and do not pay corporate income taxes,” Thaler added. “These annual tax breaks for banks far outpace the annual tax expenditure of the credit union tax exemption. They also do not take into account how the credit union tax status provides benefit to the economy at large.”
What One Study Showed
NAFCU pointed to an independent study it commissioned to examine the benefits of the credit union federal income tax exemption to consumers, businesses, and the U.S. economy. That study found that removing the credit union tax exemption would lead to a $120 billion reduction in GDP over the next decade, costing the federal government $56 billion in lost income tax revenue and resulting in the loss of nearly 80,000 American jobs per year over that span, according to NAFCU.
Thaler also pointed out that banking groups’ advocacy efforts should be focused on providing safe, affordable financial services to more working-class Americans instead of attacking credit unions – an industry that consistently steps up in times of crisis, the trade group said.
CUs Not Closing Branches
“Over the past two years banks have been closing 200 branches per month, mostly in rural and underserved communities,” Thaler wrote. “At the same time, credit unions have been adding branches in these areas so that they can fill the void left by the banks. Credit unions can do this because their cooperative, not-for-profit status.”
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