A study released Monday by the National Association of Federally-Insured Credit Unions (NAFCU) shows U.S. consumers save $16 billion per year through the credit union federal income tax exemption.
The total benefit to U.S. consumers from the presence of credit unions in financial markets was $159 billion over the 10 years covered by the study, or $16 billion per year, according to the study’s findings. The study was conducted by American University’s Robert M. Feinberg and Interindustry Economic Research Fund’s Douglas Meade.
“This study is more proof of what we already know: The credit union industry is a vital component of the nation’s economy, benefitting not only the more than 106 million credit union members but other consumers as well,” said NAFCU President and CEO Dan Berger. “Credit unions, as member-owned, not-for-profit institutions, are truly unique in their ability to serve members and their communities. We at NAFCU will remain vigilant in our fight to protect this industry’s ability to continue that work.”
The study also revealed that removing the credit union tax exemption would cost the federal government $38 billion in lost income tax revenue over the next 10 years. GDP would be cut by $142 billion, and nearly 900,000 jobs would be lost over that period.
A conservative estimate of a $10 billion per year reduction in consumers’ income – resulting from a diminished credit union role in the economy, according to the study – could lead to an annual reduction in GDP of about $14.2 billion and a loss of 88,000 jobs per year over the next decade.
The direct benefits to credit union members of these better loan and deposit rates were estimated to range from $4.4 billion to $6.9 billion annually for the period 2006-2015. Total credit union member benefits over the 2006-2015 period were estimated to be $56.7 billion.
The benefits don’t stop with credit union members, however; customers benefitted from credit unions as well, due to the competition from credit unions, by an estimated $102.2 billion from 2006 to 2015.
For more information on the study and the credit union tax exemption, click here.