CUNA President/CEO Jim Nussle corrected several falsehoods about credit unions’ tax status and reiterated that any change would be a direct tax increase on 110 million Americans Wednesday in a letter to the Senate Finance Committee. Nussle responded to a letter sent by the National Taxpayer’s Union to the Senate Finance Committee requesting an evaluation of the credit union tax status.
“Changing the credit union tax status would likely result in many credit unions converting to bank charters – essentially eliminating cooperative, member-owned institutions from the marketplace and eliminating nearly $11 billion in direct financial benefits that currently accrue to credit union members,” Nussle wrote. “Fewer credit unions also would result in fewer societal benefits including a reduction in billions of indirect financial benefits that accrue to bank customers and innumerable benefits to the economy arising from the fact that (unlike banks) credit unions serve as a counter-cyclical force during economic downturns.”
Nussle also added that credit unions structure and mission have not changed since Congress granted the credit union tax status. Their member-owned, not-for-profit status and fields of membership distinguish it from other entities in the financial services marketplace.
“Taxing credit unions would do very little in terms of addressing U.S. government budget issues. If credit unions were taxed in 2017, the receipts (according to Office of Management and Budget estimates at that time) would have accounted for only 0.07% of federal spending, which would have funded federal government operations for only seven hours,” Nussle wrote.
CUNA analysis also shows that through federal, state, local, employer, employee, excise, property, motor vehicle and sales taxes, credit unions and employees directly paid an estimated $4.2 billion in federal taxes and $2.4 billion in state taxes in 2016 alone.