Credit unions’ tax-exempt status has come under consistent scrutiny by the American Banker Association and its lobbied for Congressmen. However, the tax-exemption is crucial to the continuation of the credit unions purpose. While Congress has put forth an explanation for why credit unions are tax-exempt, there has been no rationale or justification for this explanation. This paper gives two rationales for continuing the current tax exemption for credit unions, specifically those with Community Development Credit Union and Low-Income Credit Union designations. In conclusion, not only is the tax-exempt status valid, but it is necessary given the impact credit unions have on the financial security and stability low-income individuals.
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