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Credit Union Taxation: Banker Attacks and Misinformation

Even though the credit union movement is a small fraction of that financial marketplace, bankers are lobbying to gain control of the entire marketplace. They are lobbying for credit union taxation and spreading misinformation. Here are the facts:

Why Credit Unions are Tax Exempt
  • Credit Unions are not-for-profit financial cooperatives democratically operated and controlled by members
  • Profits are returned to members in the form of higher rates paid on deposits and lower loan rates charged on loans
  • Credit Union Board of Directors are unpaid volunteers elected by and from the membership
  • We fulfill our mission to “Serve the Underserved” as mandated by law
Banker Myths vs. Facts

Myth– Banks have an unfair playing field due to the tax exempt status of credit unions
Fact– Banks have economies of scale, ability to raise capital through stock issuance, unlimited powers for commercial lending and an unrestricted customer base. Credit unions have only a tax-exempt status, which helps them compete.

Myth– Bank growth has been inhibited due to the credit unions’ unfair tax advantage
Fact– In 1994 the Banking Industry had a 94% market share in the United States versus Credit Unions 6%. In 2016, market share for banks stands at 93% while credit union market share increase to 7%. While all financial institutions have grown, market share for credit unions increased to 7%. That’s a 1% increase over a 22 year period. (cuna.org)

Myth– Taxation will not hurt credit union members or the credit union movement
Fact– A tax on credit unions is a tax on its members. Income taxes on credit unions will limit our ability to pass along a lower cost financial alternative. Further, by taxing credit unions, our capital growth will be impacted which will limit our ability to grow and serve new members.


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