Congress has provided the credit union federal tax-exemption because of the
not-for-profit, cooperative structure of credit unions, and the special mission
credit unions have to serve consumers. The credit union tax status is not based
on the size of credit unions or the products and services that they offer;
it is based on the credit union structure. This rationale for the
tax-exempt status has been ratified several times by Congress.
There is no hiding the fact that the Federal government faces a significant
budget crisis. A Presidential Commission recently recommended eliminating all
tax expenditures. The credit union tax status benefits all consumers – credit
union members and those who are not credit union members. While the credit
union tax expenditure “costs” the federal government approximately $500 million
annually, consumers benefit to the tune of $7 billion - $8 billion annually
because credit unions are tax-exempt.
Credit union competition helps keep bank and savings and loan prices lower.
For example, credit unions offering credit cards now charge lower interest rates
than most other lenders (on average by two or three percentage points). Imagine
how expensive other lenders would make credit cards, or auto loans, if credit
union competition did not exist! But that is exactly what would happen if
credit unions are taxed.
Grassroots Action Needed:
Credit union advocates
should continue to defend that status by educating Members of Congress about why
credit unions are tax exempt and the benefits of this status to the community.
Please use the talking points and handouts below to educate Members of Congress
and their staff.
- Credit Union Value Proposition Talking Points
- 06/13 Senate Finance Committee Options Paper Senate Finance Committee releases Options Paper on Tax-Exempt Organizations and Charitable Giving
- Credit Union Tax Exemption Analysis – Short Summary
- Credit Union Tax Exemption Analysis – Full Document
- Straight to the Point: Credit Unions are the Best Option For Consumers to Conduct Their Financial Services
- State-by-State Data on the Benefits of Credit Union Membership
- CU vs. Bank Comparisons
- Letter in Response to the ABA Letter on the Credit Union Tax Status
- Letter to House Tax Writers Responding to ICBA Letter
- Letter of Support for the Repeal of Foreign Account Tax Compliance Act
- Support for the Credit Union Tax Exempt Status for House Ways & Means Committee
- Senators' Response to Senate Finance Committee