Reducing wasteful government spending has been on the minds of many recently, and rightly so. However, reducing the deficit and making sensible tax reforms requires discerning which spending is fat, from which spending ultimately produces benefits that far outweigh the costs.
Should the credit union federal income tax exemption continue?
In short, yes. The evidence suggests that credit unions provide significantly more consumer benefits than they cost taxpayers. Specifically, eliminating the nonprofit status of credit unions would cost consumers $16 for every $1 of tax saved. Sticking consumers with much higher costs for a minimal tax benefit is a bad choice all the way around.
A better approach would be to encourage competition that maximizes consumer benefits. When tightening the budget, Congress needs to weigh the costs and benefits. Based on the empirical evidence and for the sake of consumers, the credit union tax exemption should be retained.
You can read the entire op-ed in the DC Journal.