Newsroom
January 19, 2017
Study: CU tax exemption saves consumers $16B a year
An independent study commissioned by NAFCU shows the benefit to U.S. consumers from the credit union federal income tax exemption is $16 billion per year, or $159 billion over the 10-year period the study examined.
NAFCU President and CEO Dan Berger lauded the study's findings as evidence of the tax exemption's crucial importance to consumers, businesses and the economy.
"This study is more proof of what we already know: The credit union industry is a vital component of the nation's economy, benefitting not only the more than 106 million credit union members but other consumers as well," said Berger. "Credit unions, as member-owned, not-for-profit institutions, are truly unique in their ability to serve members and their communities. We at NAFCU will remain vigilant in our fight to protect this industry's ability to continue that work."
The study was conducted by American University's Robert M. Feinberg and Interindustry Economic Research Fund's Douglas Meade.
In their report, the study authors noted ways banks' customers benefit from the role credit unions play in the marketplace. "The benefit of better credit union loan and deposit rates extends to bank customers as well, due to increased competition," they wrote. "A 50 percent reduction in the credit union market share would cost bank customers an estimated $6.9 billion to $15.7 billion per year in higher loan rates and lower deposit rates. The total losses to bank customers due to less favorable rates totaled $102.2 billion over the ten-year period examined.
"The total benefit to U.S. consumers from the significant presence of credit unions in financial markets was $159 billion over the ten-year period of the study, or $16 billion per year," they continued. "These results match the findings from previous studies of the impact of eliminating the credit union tax exemption in Canada and Australia, where the number of credit unions was severely reduced following taxation."
The study indicated that removing the credit union tax exemption would cost the federal government $38 billion in lost income tax revenue over the next 10 years.
The study also said a conservative estimate of a $10 billion per year reduction in consumers' income – resulting from a diminished credit union role in the economy – could lead to an annual reduction in GDP of about $14.2 billion and a loss of 88,000 jobs per year over the next decade.
NAFCU President and CEO Dan Berger lauded the study's findings as evidence of the tax exemption's crucial importance to consumers, businesses and the economy.
"This study is more proof of what we already know: The credit union industry is a vital component of the nation's economy, benefitting not only the more than 106 million credit union members but other consumers as well," said Berger. "Credit unions, as member-owned, not-for-profit institutions, are truly unique in their ability to serve members and their communities. We at NAFCU will remain vigilant in our fight to protect this industry's ability to continue that work."
The study was conducted by American University's Robert M. Feinberg and Interindustry Economic Research Fund's Douglas Meade.
In their report, the study authors noted ways banks' customers benefit from the role credit unions play in the marketplace. "The benefit of better credit union loan and deposit rates extends to bank customers as well, due to increased competition," they wrote. "A 50 percent reduction in the credit union market share would cost bank customers an estimated $6.9 billion to $15.7 billion per year in higher loan rates and lower deposit rates. The total losses to bank customers due to less favorable rates totaled $102.2 billion over the ten-year period examined.
"The total benefit to U.S. consumers from the significant presence of credit unions in financial markets was $159 billion over the ten-year period of the study, or $16 billion per year," they continued. "These results match the findings from previous studies of the impact of eliminating the credit union tax exemption in Canada and Australia, where the number of credit unions was severely reduced following taxation."
The study indicated that removing the credit union tax exemption would cost the federal government $38 billion in lost income tax revenue over the next 10 years.
The study also said a conservative estimate of a $10 billion per year reduction in consumers' income – resulting from a diminished credit union role in the economy – could lead to an annual reduction in GDP of about $14.2 billion and a loss of 88,000 jobs per year over the next decade.
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