As GAC Opens, Credit Union Advocates and Bankers Resume Tax Fight
Banks attack tax exemption, while credit unions defend it
As 6,000 credit union advocates gathered in the nation’s capital this week, banking trade groups renewed their attacks on the credit union tax exemption. As you might expect, credit union advocates returned fire.
The newly created America’s Credit Unions trade group brought the advocates to Washington to “hike the hill” and tell their elected representatives why credit unions are better than banks. “You’ve earned your tax status,” Jim Nussle, the trade group’s president/CEO told the assembled credit union advocates Monday morning. “We are not going to give one inch.”
While Nussle defended the tax exemption, a new poll released by the Independent Community Bankers of America shows that most Americans do not realize that credit unions have that tax advantage. The ICBA poll of 4,416 adults was conducted Jan. 11-15 by Morning Consult. Of those responding, just 21% were aware that credit unions have a tax exemption and 68% said they thought credit unions were simply a type of bank.
In the poll, which had a margin of error of plus/minus 1%, 54% of those responding said that Congress should investigate whether the credit union tax exemption is still warranted. That is exactly what the American Bankers Association and its state affiliates called for in a letter to congressional tax-writing committees last week.
“Credit union growth, while theoretically positive for the communities credit unions serve, is only beneficial if it is accompanied by congressional oversight and careful regulatory supervision that accounts for the potential consequences of that growth on the credit union model,” the letters to leaders of the House Ways and Means Committee and the Senate Finance Committee said.
They called on the committees to investigate whether credit unions continue to deserve their tax advantage. “Hearings once every 20 years are not enough for the 140 million consumers who use credit unions, nor the taxpayers who subsidize their services,” they wrote.
Credit union trade groups responded, with America’s Credit Unions and state credit union leagues sending their own letter. Discussing the bankers’ missive, the credit union advocates wrote, “Their letter once again reflects a lack of understanding of both the credit union industry and why consumers are choosing credit unions over banks.”
The letter cited statistics that show that banks closed 19,301 net branches between 2012 and 2023, while credit unions opened 1,373 net branches during the same period. “It is deeply cynical of banks to write a letter to Congress complaining about credit unions stepping up to serve the consumers they have abandoned,” they wrote. “A thank you might be more appropriate.”