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NAFCU Vice President of Legislative Affairs Brad Thaler sent a message to lawmakers on Capitol Hill Friday 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.

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.”

Preserving credit unions’ tax-exempt status remains a top priority for NAFCU in its advocacy efforts. In 2021, NAFCU commissioned an independent study to examine the benefits of the credit union federal income tax exemption to consumers, businesses, and the U.S. economy. The 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.

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.

“Over the past two years banks have been closing 200 branches per month, mostly in rural and underserved communities,” Thaler said. “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 structure allows them to put members ahead of profits.”

Thaler reiterated several legislative priorities NAFCU and credit unions are seeking to help the industry meet the needs of consumers and support Main Street small businesses and noted that banking trades should work with credit unions where their priorities align, rather than attacking the industry.

NAFCU will continue to tout the credit union difference and fight for a legislative and regulatory environment that allows the industry and its 134 million members to thrive.