As the year draws to a close, it’s important to reflect on the lessons learned after an emerging post-pandemic economic recovery. At NAFCU, your ability to go above and beyond to serve your members fills us with pride and propels us forward. This year was no different. In fact, credit unions have surpassed expectations, even after the height of the pandemic, and stood out among other financial institutions when it came to helping communities and Main Street small businesses stay afloat.
It’s no wonder why so many Americans choose credit unions to help meet their financial needs. That’s why NAFCU remains steadfast in advocating for the credit union industry to maintain its ability to provide better rates, lower fees and exemplary customer service to consumers.
Bank lobbyists are threatening this ability, calling to eliminate credit unions’ federal tax exempt status. Credit unions are not-for-profit cooperative structures whose tax exempt status has been reaffirmed by the IRS, Treasury Department and Congress time and time again. This tax exempt status allows the credit union industry to focus on providing consumers with the outstanding financial products and services it is known for.
Dr. Robert M. Feinberg of American University and Dr. Douglas Meade of the Interindustry Economic Research Fund took a close look at what would happen if the tax exemption was eliminated. The study found that removing credit unions’ tax exempt status would reduce economic activity by a colossal $120 billion over ten years and cost the federal government nearly $56 billion in tax revenue. Perhaps more worrisome, and pertinent to the nascent economic recovery, removing the exempt status would eliminate nearly 80,000 jobs per year over a decade.
If these findings alone are not enough for Congress to dismiss any call to eliminate the credit union tax exemption, it’s worth noting that while the tax exempt status directly benefits the credit union industry’s 127 million members, the study revealed that exemption actually benefits all households, whether credit union members or not, to the tune of $15 billion annually.
Losing these benefits would be profound in minority and rural communities, especially with minority depository institutions where there are currently over three times as many credit unions as there are banks. As banks continue to close branches in rural areas, upwards of 10% since 2012, credit unions do their part in filling these banking deserts by growing their rural branch network in recent years.
NAFCU’s unwavering advocacy team will carry on its efforts to ensure Congress is made aware of the benefits of the credit union tax exempt status and fight back against bank lobbyists who are deceptively calling for the removal of the status.
While the road to economic recovery may be tumultuous at times, I know credit unions are well-equipped to handle forthcoming challenges, and we encourage you to keep up the good fight of defending credit unions’ tax exemption status. Your efforts demonstrate why it is such a vital policy and a critical one to the present and future of our nation’s economy. I remain honored to be part of an industry that puts its members first and I am looking forward to joining you as we protect the credit union tax exemption.
Connect with Dan Berger on Twitter, @BDanBerger, and on his blog at nafcu.org/berger-leadership-blog.