June 27, 2013
The Honorable Max Baucus
Ranking Member
Committee on Finance
United States Senate
Washington, D.C. 20510
The Honorable Orrin Hatch
Chairman
Committee on Finance
United States Senate
Washington, D.C. 20510
Dear Chairman Baucus and Ranking Member Hatch:
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’m writing to urge you to protect the credit union federal tax exemption as you proceed with tax reform.
The efforts of credit unions and the large positive impact they have on the financial welfare of American consumers would not be possible without the credit union tax exemption. Simply put, the federal corporate income tax exemption is an issue of survival for credit unions. If the federal tax exemption was removed many credit unions would convert to banks or simply close their doors. Without credit unions, for-profit banks would remain unchecked and likely increase rates and fees on consumers. Additionally, many consumers would not have access to traditional financial services institutions and have no choice but to turn to high-cost predatory alternatives.
Last year, NAFCU released an economic study that shows that 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. Other key points of the study show:
• The cumulative benefit of credit unions to the economy totals over $10 billion per year.
• The economic benefit of the tax exemption represents a 20-fold return on the Joint Committee on Taxation’s (JCT) $500 million estimate for the cost of the credit union tax expenditure for FY 2013.
• That eliminating the credit union tax exemption would result in the loss of 150,000 jobs per year, a shrinking of the GDP and a net loss of revenue to the federal government.
With more than 90 tax expenditures on JCT’s list that are larger than the credit union tax exemption, we ask you to consider the many alternatives that would have less devastating impact on our industry and the economy as a whole.
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.
Sincerely,
B. Dan Berger
Executive Vice President, Government Affairs
cc: Members of the United States Senate