America’s credit unions provided about $16.5 billion in financial benefit in 2018 to the U.S. economy, according to this whitepaper CUNA published recently. Top highlights include the following:
- Credit unions are exempt from federal income tax because of their unique structure as not-for-profit financial cooperatives, which return proceeds to member-owners through fewer fees, reduced interest rates, and higher savings yields.
- Credit unions delivered an estimated $16.5 billion in direct and indirect financial benefits in 2018. That amount is roughly eight times larger than the tax exemption Congress granted to credit unions ($1.8 billion) in 2018.
- Credit unions pay a wide variety of federal, state, and local taxes such as employer taxes, excise taxes, and property taxes. Collectively that amounts to nearly $20 billion in taxes each year.
- Imposing new taxes on credit unions would threaten their ability to provide the benefits they offer members and nonmembers. Ultimately, it would mean trading off small gains in tax revenue for increased risk to credit unions and a reduction in consumers’ financial choices.
- Additionally, the 115 million credit union members pay personal income tax on both the proceeds distributed by credit unions and the interest the members earn. Indeed, credit unions members paid an estimated $1.5 trillion in state and federal taxes in the most recent tax year.
- The value of the credit union tax expenditure pales in comparison to the tax reductions that commercial banks enjoy due to the 2017 Tax Cuts and Jobs Act. While the credit union tax expenditure was approximately $1.8 billion in 2018, lower tax rates reduced the tax burden on U.S. banks by nearly $30 billion in 2018 and going forward since the reduction of the top rate to 21% is a permanent fixture of the 2017 tax law changes.
What about in our great state of Montana? We have good news there as well.
- CUNA estimates that Montana credit unions provided $16,118,118 in direct financial benefits to the state’s 392,002 members during the twelve months ending December 2018.
- These benefits are equivalent to $41 per member or $86 per member household!
Those are impressive numbers! We know your credit unions offer so much to members each day to assist them in their financial lives. Give yourself a pat on the back for being part of something so crucial and successful!