NAFCU overstates the impact of taxing credit unions
by. Keith Leggett
The National Association of Federal Credit Unions (NAFCU) last week released a dubious study claiming that taxing credit unions would hurt the economy by reducing GDP and job growth.
The study states that the annual reduction in GDP would equal $14.8 billion per year and 150,000 jobs would be lost per year, if credit unions were taxed. The study contends that this will occur because reduced competition in the financial services industry will result in higher loan rates and lower savings rates, which will depress personal income and reduce spending.
The NAFCU study also said that the taxation of credit unions would actually increase the federal deficit by almost $1 billion per year as federal tax revenues would fall by more than the revenues collected from taxing credit unions. Oh really.
But why should higher loan rates and lower savings rates be the outcome of taxation?
As a financial cooperative, credit unions claim they operate in their members best interest and have a choice regarding the pricing of their products.continue reading »