July 14, 2017

NAFCU touts value of CU tax exemption to Senate panel

NAFCU submitted information to the Senate Finance Committee Friday regarding the value of the credit union federal tax exemption in the marketplace for consumers and to the economy via job creation as the committee works on overhauling the nation's tax code.

Last month, committee Chairman Orrin Hatch, R-Utah, invited interested parties to submit tax reform ideas and comments to the committee. On Tuesday, the committee will hold a hearing on the prospects and challenges of comprehensive tax reform.

"While meeting the needs of roughly 110 million members, credit unions also provide an important source of capital to our nation's small businesses," wrote NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt in a letter to Hatch Friday. "All told, the cumulative benefit credit unions provide the greater economy totals over $16 billion a year, according to an independent study released by NAFCU earlier this year."

Hunt included a copy of the tax study with her letter. She also pointed out from the study that eliminating credit unions' tax status would result in the loss of 900,000 jobs over the next 10 years, a shrinking of the gross domestic product and a net loss of revenue to the federal government. "Simply put, the tax exemption is an issue of survival for credit unions," she added.

She also noted that credit unions do, in fact, pay taxes, including property, federal payroll and other local taxes. And knocking the banking industry's claim that credit unions have an unfair advantage because of their tax exemption, Hunt pointed out that only two banks have converted to credit unions, while 38 credit unions have converted to banks in the past 20 years.

"Credit unions help facilitate economic growth through lower loan rates, higher interest on deposits, and lower fees," she concluded. "Credit union members will ultimately bear the cost of any new tax imposed on credit unions. Because this issue strikes at the very core of how credit unions have operated since their inception, protecting the credit union tax exemption is the chief priority of NAFCU."