NAFCU Letter to House Committee on Ways and Means on Importance of Credit Union Tax Exemption

May 23, 2013

The Honorable Dave Camp
Committee on Ways and Means
United States House of Representatives
Washington, D.C. 20515

The Honorable Sandy Levin
Ranking Member
Committee on Ways and Means
United States House of Representatives
Washington, D.C. 20515

Re:  The Importance of Retaining the Credit Union Tax Exemption

Dear Chairman Camp and Ranking Member Levin:

On behalf of the National Association of Federal Credit Unions (NAFCU), the only trade association that exclusively represents the interests of our nation’s federal credit unions, I write today to urge you to protect the credit union federal tax exemption as you continue your work of drafting tax reform legislation.

As we have communicated to you before, the cumulative benefit credit unions provide the greater economy totals over $10 billion a year according to an independent study released by NAFCU last year.  As the study also shows, 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. 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.  I have included a copy of the study along with this letter.

Simply put, the tax exemption is an issue of survival for credit unions.  Despite what some claim, there remain significant regulatory and statutory differences between not-for-profit member-owned credit unions and other types of financial institutions – including limits on who they can serve and their ability to raise capital. As you know, during the financial crisis credit unions continued to lend to consumers and small businesses left behind by our nation’s mega-banks. Credit unions didn’t participate in the TARP bailout and are proud of their continued service to Main Street America.

In other countries where the tax exemption has been eliminated for credit unions, the number of credit unions has declined dramatically.  If the tax exemption was removed, many would convert to banks or just go away.  Without credit unions, which serve to provide checks and balances in the marketplace, for-profit banks would likely increase rates and fees on consumers.

Again, we urge you to retain the credit union tax exemption as tax reform moves forward. If my colleagues or I can be of assistance to you, or if you have any questions regarding this issue, please feel free to contact me or NAFCU’s Vice President of Legislative Affairs Brad Thaler, at (703) 842-2204.


Fred R. Becker Jr.
President and CEO

cc:     Members of the House Committee on Ways and Means

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