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1 Erica York, Repealing the Federal Tax Exemption for Credit Unions 1 (2019)

handle is hein.taxfoundation/repfedtxe0001 and id is 1 raw text is: IRepealing the Federal Tax Exemption for Credit Unions Erica York FISCAL Economist FACT No. 670 Oct. 2019 Key Findings Under current law, the tax code exempts credit unions from paying corporate income taxes. The Joint Committee on Taxation estimates the exemption will reduce federal revenue by $1.9 billion in 2019. Historically, the exemption was justified on the grounds that credit unions would fulfill three purposes: restrict their customer base to people with a common bond, serve customers of moderate means, and provide services that were difficult to obtain at banks. Evidence indicates that the credit union industry has strayed from its original, tax-exempt purpose and is in direct competition with its taxed competitors. The exemption cannot be justified on the grounds of sound tax policy, is not neutral, and leads to an inefficient allocation of resources. Ending the exemption would make the tax code more efficient and provide lawmakers with revenue that could be used to offset other improvements in the tax code. The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and local levels. We are a 501(c)(3) nonprofit organization. ©2019 Tax Foundation Distributed under Creative Commons CC BY NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org

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