NAFCU Tax Study Shows Credit Unions Generate $17 Billion in Benefits Yearly to Americans
WASHINGTON--(BUSINESS WIRE)--The National Association of Federal Credit Unions (NAFCU) today released a new study on the value of the credit union federal tax exemption that shows Americans would lose an annual $17 billion in economic benefits if this tax exemption were eliminated.
“Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy”
“The data presented in NAFCU’s tax study illustrates the importance of the credit union business model within the U.S. economy,” said NAFCU President and CEO Dan Berger. “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 study, “Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy,” shows that repeal of the credit union tax exemption would cost the federal government $15 billion in lost tax revenue, $148 billion in gross domestic product and 1.5 million lost jobs over the next decade.
The study, using data from 2005 to 2013, shows:
- A 50 percent reduction in the credit union market share would have cost bank customers an estimated $7.6 billion to $16.2 billion per year over the nine year period due to higher loan rates and lower deposit rates in the absence of credit union competition.
- Credit union members realized $51.5 billion in benefits over the nine-year span of the study due to credit unions’ lower interest rates on loans and higher rates on savings.
- Bank customers realized an estimated $101.4 billion in benefits over the same period as competition from credit unions forced banks to offer consumers more favorable rates.
- The total benefit to U.S. consumers from credit unions’ presence in financial markets was $153 billion from 2005 to 2013 – or $17 billion per year.
State by state, the study shows that the greatest consumer benefits amounted to $17.9 billion in California, $15.6 billion in New York, $10.9 billion in Texas, $7.3 billion in Florida, and $5.9 billion in North Carolina.
The study was co-authored by Robert Feinberg, professor of economics at American University, and Douglas Meade, director of research at Interindustry Economic Research Fund Inc.
For more information on the study and the credit union tax exemption, go to http://www.nafcu.org/cutaxexemption/.
The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.