Protecting the credit union tax status is at the forefront as the Senate Finance Committee holds the first of what will likely be many tax hearings with key provisions of the Tax Cuts and Jobs Act scheduled to expire at year end 2025. America’s Credit Unions President/CEO Jim Nussle wrote to the Senate Finance Committee in advance of its Thursday hearing on tax avoidance, highlighting the life-changing impact the credit union tax status makes on the lives of more than 140 million Americans.
“As part of the 2025 tax policy debate, we expect credit union opponents to attack credit unions by distorting facts, making unsupported claims, and urging Congress to remove the credit union tax exemption,” Nussle wrote. “That is why it is important to remind Congress why credit unions were granted tax-exempt status, and why nearly 90 years since the passage of the Federal Credit Union Act the work that credit unions do to serve those left behind by the big banks is more important than ever.”
Credit unions delivered an estimated total of $35 billion in financial benefits for American consumers in the year ending March 2024. Credit unions also paid over $12 billion in direct taxes in 2023 through payroll, property, excise, and other taxes, and generated over $20 billion more indirectly in tax revenue for governments by being in the marketplace.
“These benefits arise from member-ownership and the absence of stockholders demanding a market return on investment, and they take the form of lower loan interest rates, higher savings yields, and fewer/lower fees,” Nussle wrote. “In contrast, the Joint Committee on Taxation estimates the value of the credit union federal tax expenditure was $2.6 billion in 2023. The fact is the credit union federal tax exemption is one of the best returns on the tax expenditure dollar for the federal government.”
He added that credit unions are:
- Member-owned, not-for-profit financial cooperatives where members join with other members to elect the credit union’s board of directors and have an equal say over how the credit union is run;
- Affordable, because credit unions are not focused on paying profits to investors, they are committed to making financial services more affordable for their members;
- Member-focused, as the common bonds that unite credit unions’ membership mean they emphasize relationship banking and a high level of customer service;
- Safe, as the credit union industry is well capitalized, and a much larger share of credit union deposits are covered by federal deposit insurance than bank deposits;
- Diverse, with more than half of credit union CEOs being women, while only 5% of banks have a woman CEO. Additionally, three times as many credit unions as banks are minority depository institutions; and
- Accessible, since banks, particularly the largest banks, have closed over 8,600 branches since 2020.
