Cost to Taxpayers

Credit unions’ federal tax exemption costs the U.S. more than $3.1 billion per year. Without reporting requirements holding them accountable to their mission, it remains unclear what exactly 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 As Congress proceeds with tax reform, members should consider uprooting this outdated exemption and no longer picking winners and losers.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
Previous slide
Next slide

Large Credit Unions’ Abuse of Their Tax Exemption

Recent News and Insights

insights

Together with the credit union industry’s outdated tax exemption and its continued campaign to whittle down field of membership requirements, multimillion-dollar stadium naming rights agreements have become a central component of how these special purpose financial institutions market themselves to new segments of consumers.

news

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. 

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.

insights

Here’s how some large credit unions spend the money they save by not paying federal taxes: Super Bowl commercials to help them get even bigger. 

insights

Large credit unions continue using their profits to snatch up naming rights for buildings and stadiums across the nation. Plenty of companies do the same thing, but unlike those businesses, credit unions were given a special tax-exempt status so they could use their earnings to better serve consumers of modest means, not to build their brand. When will regulators and lawmakers finally start to take notice of this troubling trend?

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.”

See the impact on taxes in your state.

Tell Congress it’s time to reform credit unions.