|| The study was presented before Wednesday's
Caucus general session. Shown, left to right, are
NAFCU Chief Economist David Carrier and study
authors Feinberg and Meade. (Hathcox photo)
Sept. 13, 2012 – A study released at NAFCU’s Congressional Caucus Wednesday finds that elimination of credit unions’ exemption from federal corporate income taxes would cost consumers of all financial institutions about $10 billion a year and exact large reductions in federal revenues, GDP and jobs.
The study, conducted for NAFCU by Robert Feinberg Ph.D., professor of economics at American University, and Douglas Meade, Ph.D., director of research at Interindustry Economic Research Fund Inc., estimates that loss of this exemption for credit unions would, over 10 years:
- cost the federal government $15 billion in lost tax revenue;
- slow economic growth, or GDP, by $148 billion (in 2010 dollars); and
- result in 1.5 million lost jobs.
Titled “Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy,” the study shows consumers of all depository institutions – not just credit unions – would end up paying higher interest rates on loans and earning lower interest rates on deposits in the absence of the credit union exemption from federal corporate income taxes.
According to the findings, direct benefits to credit union members of favorable rates ranged from an estimated $4.3 billion to $8 billion a year over the past seven years. From 2005 to 2011, that benefit is estimated at nearly $43 billion. Had credit unions’ market share been 50 percent lower during the same seven-year period, bank customers would have borne costs of $2.4 billion to $6.3 billion more per year – nearly $30 billion overall.
The total benefit to consumers from the presence of credit unions in financial markets was $72.6 billion from 2005-2011, or about $10 billion a year, the study shows.
“This study shows how vitally important credit unions are to all Americans, not just those who are members of a credit union,” said NAFCU President and 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.”