Cost to Taxpayers

The federal income tax exemption for credit unions sticks taxpayers with a hefty bill: nearly $24 billion over 10 years. But with no public accountability for their contributions to their communities, it’s fair to ask: What do taxpayers get in return? 

Cost to Taxpayers icon

Expert Views

Josh Daniels, Libertas Institute
“If Congress wants to make the tax system fairer, lawmakers should focus on unfair tax advantages and loopholes received by certain businesses and industries. To see the most blatant example of one special interest receiving preferential treatment through the tax code, look no further than the ridiculous charity status that allows big credit unions to make millions of dollars without paying a dime in taxes.”
— Deseret News, 2017
Diana Furchtgott-Roth, Manhattan Institute
“Credit unions were originally given tax-exempt status so that they would service lower-income individuals. The situation has now changed, and the tax law should change with it. As Congress proceeds with tax reform, members should consider uprooting this outdated exemption and no longer picking winners and losers. Taxpayers should not have to subsidize a credit union’s name on a stadium, or people’s purchases of aircraft and boats.”
— U.S. News, 2017
Brandon Arnold, National Taxpayers Union
“Congress could review the tax exemption currently provided to all credit unions, bearing in mind there are now 281 credit unions that hold over $1 billion in assets or more. Congress should examine whether this exemption should be phased down or capped, while at the same time helping to create a more navigable regulatory on-ramp that would make it easier for such entities to charter themselves as banks.”
— National Taxpayers Union, 2017
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Expert Views

Josh Daniels, Libertas Institute
“If Congress wants to make the tax system fairer, lawmakers should focus on unfair tax advantages and loopholes received by certain businesses and industries. To see the most blatant example of one special interest receiving preferential treatment through the tax code, look no further than the ridiculous charity status that allows big credit unions to make millions of dollars without paying a dime in taxes.”
— Deseret News, 2017
Diana Furchtgott-Roth, Manhattan Institute
“Credit unions were originally given tax-exempt status so that they would service lower-income individuals. The situation has now changed, and the tax law should change with it. As Congress proceeds with tax reform, members should consider uprooting this outdated exemption and no longer picking winners and losers. Taxpayers should not have to subsidize a credit union’s name on a stadium, or people’s purchases of aircraft and boats.”
— U.S. News, 2017
Brandon Arnold, National Taxpayers Union
“Congress could review the tax exemption currently provided to all credit unions, bearing in mind there are now 281 credit unions that hold over $1 billion in assets or more. Congress should examine whether this exemption should be phased down or capped, while at the same time helping to create a more navigable regulatory on-ramp that would make it easier for such entities to charter themselves as banks.”
— National Taxpayers Union, 2017
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Large Credit Unions’ Abuse of Their Tax Exemption

Recent News and Insights

insights

It’s not just credit unions that are making a pile from buying banks. As it turns out, there is a cottage industry of consultants and advisors behind these deals, which are fueled by credit unions’ federal tax exemption. 

insights

The latest bank-grab is Wisconsin’s CoVantage Credit Union snapping up Illinois-based LincolnWay Community Bank’s assets and customer base. The purchase of $277 million LincolnWay will bring CoVantage to over $3 billion in assets. Not exactly your father’s Oldsmobile, right? More like his fully loaded, mint-condition Cadillac.  

insights

The growing trend of credit unions buying banks is troubling in many ways. Perhaps the worst is that communities where large credit unions swoop in–especially in low- and middle-income areas–do not benefit from these transactions, despite egregious claims made by the head lobbyist for the largest credit unions in a factually tenuous op-ed in the American Banker.

See the impact on taxes in your state.

Tell Congress it’s time to reform credit unions.