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 As Congress proceeds with tax reform, members should consider uprooting this outdated exemption and no longer picking winners and losers.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

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Last week, Utah Valley University (UVU) announced “the largest single gift in UVU’s history,” a $28.5 million pledge from Utah Community Credit Union (UCCU), with $20 million earmarked for a state-of-the-art soccer stadium featuring 10 luxury suites. This questionable use of credit union member – and taxpayer – resources highlights a troublesome trend within the credit union industry.

news

At long last, state and federal regulators have taken a hard look at a massive proposed deal in which a super-large credit union attempted to purchase a bank with over $1 billion in assets. And finally, they appear to have grown tired of these antics, put their respective feet down and said, “enough is enough.”

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. 

See the impact on taxes in your state.

Tell Congress it’s time to reform credit unions.