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? 

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 As Congress proceeds with tax reform, members should consider uprooting this outdated exemption and no longer picking winners and losers.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

insights

According to the Tax Foundation, one of the nation’s leading independent voices on tax policy, the federal income tax exemption for credit unions is inefficient, narrowly beneficial to one subset of the financial services industry, and an unfair competitive advantage that “…could be reformed, and the resulting revenue used to further improve the corporate tax base or pay for new spending.”

insights

It’s that time of year again in Washington: The annual Congressional negotiation over the National Defense Authorization Act. And as sure as the sun rises in the east and sets in the west, tax exempt credit unions are yet again trying to limit the financial services options for our women and men in uniform.

See the impact on taxes in your state.

Tell Congress it’s time to reform credit unions.