WASHINGTON–With the credit union tax exemption under renewed scrutiny, a new academic study suggests eliminating it would not only not increase tax revenues, it would actually lead to a reduction in tax revenue.

The independent study, conducted by Dr. Robert Feinberg of American University and Dr. Douglas Meade of Interindustry Economic Research Fund, focuses on the economic benefits stemming from the credit union tax status to consumers and the economy at large, according to the authors.

The study has been released at the same time America’s Credit Unions prepares to host its Governmental Affairs Conference (GAC) in Washington, where Congress is increasingly searching for ways to fill the federal budget deficit.

‘$33 Billion in Lost Income’

“Our analysis indicates that removing the credit union tax exemption would cost the federal government $33 billion in lost income tax revenue over the next 10 years,” the author state. “GDP would be reduced by $266 billion, and 822,000 jobs would be lost over the next decade as well. The benefit of better credit union loan and deposit rates extends to bank customers as well, due to increased competition. A 50% reduction in the credit union market share would cost bank customers an estimated $11.9 billion to $22.8 billion per year in higher loan rates and lower deposit rates.”

The analysis further suggests that the rate differences found between banks and credit unions are “highly consequential to households, especially those living at the margins. For example, a borrower with a $40,000, 60-month augo loan at the average credit union rate over the 2014-2023 period, would save $1,600 over the life of the loan versus the prevailing bank rate.”

America’s Credit Unions Responds

In response to the 13-page report that cites 25 different sources, America’s Credit Unions President/CEO Jim Nussle’s said in a statement, “For 90 years, credit unions have stood the test of time because of the measurable results they bring to communities across the country – many who have been left behind by the banks with few alternatives that are safe, insured, and regulated. This study proves the real impact of the credit union difference, with higher interest rates for savings, checking, and money market accounts while providing the lowest rates on real estate and auto loans. Access to these offerings is the difference between success and failure when it comes to everyday American’s ability to achieve their American Dream. That’s what credit unions do.

“As 6,000 credit union advocates descend on Capitol Hill next week, they are well aware of the bank lobby trying to counter and dissuade the stories and messages from 140 million Americans who chose credit unions as their financial institution,” Nussle continued. “What the banks won’t tell lawmakers is that removing the credit union tax status will significantly hamper the economic prosperity of our country over the next decade with the price tag of $33 billion in lost tax revenue, our GDP will be reduced by $266 billion, and 822,000 jobs will be lost. Bottom line: if credit unions weren’t in the market, Americans would lose billions over the next decade and the most vulnerable and underserved communities would have little to no access to financial services to help them achieve their best lives.”

How to Find Study

The full study can be found here: https://americascus.widen.net/s/jsfcv9svqk/econbenefitscutaxstatus-wp