NAFCU President and CEO Dan Berger detailed the economic importance of the credit union federal income tax exemption in a response Tuesday to a report released by retiring Sen. Tom Coburn, R-Okla., which calls the exemption unnecessary.

“Altering the tax status of credit unions would have a devastating impact not only on credit union members across the country, but also on consumers and small businesses in general,” Berger wrote in his letter to Coburn, citing an independent study commissioned by NAFCU this year. “Eliminating the credit union tax exemption would result in the loss of 150,000 jobs a year, a shrinking of the GDP, and a net loss of revenue to the federal government.”

Berger also cited a study from the Small Business Administration that found that credit union business lending has helped offset declines in bank business lending during the financial crisis, allowing small businesses to survive.

Coburn’s report highlighted various tax expenditures throughout the U.S. tax code which he believes are unnecessary, including credit unions’ federal income tax exemption.

NAFCU remains vigilant on protecting credit unions’ tax exemption.

The NAFCU-commissioned study found that removing the credit union tax exemption would actually cost the federal government $15 billion in lost income tax revenue over the next 10 years and that gross domestic product would be reduced by $148 billion.

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