Credit unions go to bat for tax exemption

Scrapping the tax exemption for credit unions would both cost the government revenue and hurt the economy, according to a new industry study.

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The study, sponsored by the National Association of Federal Credit Unions (NAFCU), said tax revenue would drop by $15 billion if the tax exemption went away, as would 1.5 million jobs. Gross domestic product (GDP) would fall as well, by $148 billion, the study says.

“The data presented in NAFCU’s tax study illustrates the importance of the credit union business model within the U.S. economy,” Dan Berger, the credit union association’s chief executive, said in a statement. “It shows the necessary competitive edge credit unions bring to the financial marketplace that benefits all Americans, regardless of whether they obtain their financial services from a credit union or a bank.”

The credit union study comes just days before House Ways and Means Committee Chairman Dave Camp (R-Mich.) is expected to release a comprehensive draft discussion on tax reform, which will intensify the efforts of outside groups and K Street to protect their favorite tax breaks.

The banking industry has long criticized the credit union exemption, arguing credit unions basically act as banks and the tax break gives them an unfair advantage.