The middle class in the United States is in between a rock and a hard place these past few years. With the rising cost of living, immense consumer debt, high taxes and inflation, millions of Americans are now potentially facing another tax hike: an end to tax-exempt status for non-profit credit unions.
This proposal of the tax code overhaul by congress could affect as many as 96 million Americans. In addition to the scrapping of the tax-exempt status, credit unions could be forced to slash tens of thousands of jobs and perhaps hurt economic growth, according to a whitepaper from Credit Union National Association (CUNA).
Essentially, the credit union sector argues that this is a move by banking lobbyists to eliminate the competition between banks and credit unions. If the measure moves forward then middle class Americans and small businesses could very well face higher banking fees and increased loan and mortgage rates.
According to the Congressional Joint Committee on Taxation, it is estimated that the tax exemption for credit unions costs approximately $500 million, a tiny fraction of the budget deficit and national debt. Furthermore, the American Consumer Institute notes that this would cost customers $16 for each $1 saved.
It is argued by banking lobbyists that the tax exemption is unfair, but proponents of credit unions and their tax-exempt status say private banks maintain roughly 93 percent of all financial assets in the U.S. today – credit unions have about six percent.
CUNA stated in a report Friday that it will be working with its organizations and partners to fight this proposal. It plans to hold a nationwide online rally on Oct. 2 to support “Don’t Tax My Credit Union.”
“Rather than rallying supporters at the National Mall–like so many campaigns do–this movement will rally tens of thousands of credit union members nationwide online,” said Bill Cheney, president and CEO of CUNA, in a statement. “Our digital engagement has been a tremendous success this year, and we hope that support will culminate with our virtual rally.”
A video can be viewed below.