NAFCU study: Americans see $17B in benefits yearly from tax-exempt CUs
NAFCU today is sending Congress findings of a new study that shows Americans would lose an annual $17 billion in economic benefits if the credit union federal tax exemption were eliminated.
"The data presented in NAFCU's tax study illustrates the importance of the credit union business model within the U.S. economy," said NAFCU President and CEO Dan Berger. "It shows the necessary competitive edge credit unions bring to the financial marketplace that benefits all Americans, regardless of whether they obtain their financial services from a credit union or a bank."
Reports said Wednesday that House Ways and Means Chairman Dave Camp, R-Mich., may be ready to release a "discussion draft" on tax reform to committee members next week. Meanwhile, Senate Finance Committee Chairman Ron Wyden, D-Ore., is also focused on reform but said he wants to first tackle the tax extenders that expired at the end of 2013.
NAFCU, which holds preserving credit unions' federal corporate income tax exemption as its top priority, is releasing its 2014 study as lawmakers consider their next steps on broad tax reform. It is encouraging credit unions to use the study in their discussions with lawmakers about the importance of preserving the credit union exemption
The new tax study, conducted for NAFCU by Robert Feinberg, professor of economics at American University, and Douglas Meade, director of research at Interindustry Economic Research Fund Inc., using data from 2005 to 2013, shows the following:
- A 50 percent reduction in the credit union market share would have cost bank customers an estimated $7.6 billion to $16.2 billion per year from 2005 to 2013 due to higher loan rates and lower deposit rates in the absence of credit union competition.
- Credit union members realized $51.5 billion in benefits over the nine-year period due to credit unions' lower interest rates on loans and higher rates on savings.
- Bank customers realized an estimated $101.4 billion in benefits over the same period as competition from credit unions forced banks to offer consumers more favorable rates.
- The total benefit to U.S. consumers from credit unions' presence in financial markets was $153 billion from 2005 to 2013 – or $17 billion per year.
- State by state, the greatest consumer benefits amounted to $17.9 billion in California, $15.6 billion in New York, $10.9 billion in Texas, $7.3 billion in Florida, and $5.9 billion in North Carolina.
Titled "Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy," the study demonstrates that repeal of the credit union tax exemption would cost the federal government $15 billion in lost tax revenue, $148 billion in gross domestic product and 1.5 million lost jobs over the next decade.
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