February 24, 2014

Hunt, in CU Journal, touts CU tax exemption as Camp readies reform draft

New findings in a NAFCU study showing the $17 billion annual economic benefit from the credit union federal tax exemption were highlighted in an editorial in Credit Union Journal Monday by NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt.

Those findings are detailed in NAFCU's 2014 tax study, which was sent to all members of Congress. Hunt said the report underscores the importance of credit unions to the nation's economy. "It shows that the industry's tax exemption plays an important, positive role in helping Americans save and prosper," she wrote of the study, titled "Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy."

She pointed to some key results from an analysis of data covering the period of 2005-2013:

  • A 50 percent reduction in the credit union market share would cost bank customers an estimated $7.6 billion to $16.2 billion per year due to higher loan rates and lower deposit rates.
  • Credit union members realized $51.5 billion in benefits due to lower loan and higher deposit rates provided by their credit unions.
  • Bank customers realized an estimated $101.4 billion in benefits over the same period as competition from credit unions forced banks to keep their rates low.

"Credit unions bring competitive pressure to the financial marketplace, and that's good for all consumers regardless of where they bank," Hunt wrote.

Hunt's editorial ran Monday as reports continued to point to the approaching release of a tax reform discussion draft by House Ways and Means Committee Chairman Dave Camp, R-Mich. While NAFCU continues to hear there have been no reports the credit union exemption has been targeted, the association remains vigilant. It is also following developments related to tax extenders, which are being addressed by Senate Finance Committee Chairman Ron Wyden, D-Ore., and any changes in unrelated business income tax requirements, or UBIT.