WASHINGTON — American consumers would lose $17 billion in economic benefits a year if the credit union federal tax exemption were to be eliminated, according to a new study from NAFCU.
The study, "Economic Benefits of the Credit Union Tax Exemption to Consumers, Businesses and the U.S. Economy," found that repealing 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.
Other major findings from the NAFCU study, using data from 2005 to 2013, include:
- A 50% 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.
"The data presented in NAFCU's tax study illustrates the importance of the credit union business model within the U.S. economy," NAFCU President and CEO Dan Berger said in a statement. "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."
State by state, the NAFCU study found the greatest consumer benefits were $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.
