Status of Credit Union Tax Parity Issue

by Dave Caris, CEO - Community Bankers of Iowa
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Tax reform legislation has not yet been introduced in the Iowa Legislature, but the Governor, the House and the Senate are all expected to release their versions of tax reform legislation in the next several weeks. Tax or Ways and Means Committee bills are not subject to the funnel deadlines of the Legislature, so comprehensive tax reform, including the issue of credit union taxation, will be a live issue until the end of the Legislative Session in April. Prior to the introduction of legislation and the resulting debate, the Credit unions have launched a massive media and grassroots campaign in an effort to maintain their "FREE RIDE."
 
It's important that bankers speak out to policy makers on this critical issue to counter the onslaught of contacts from credit unions. The Iowa Bankers Association has developed an excellent and quick method of finding and emailing your State Legislator to speak out on this issue. Just click here. The IBA and CBI are united on this major issue. We urge you to email your State Senator and Representative and, in your own words, tell them it's time to end the free ride. The following are a few key points you may want to consider:
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• Banks pay about $360 million a year in taxes to support Iowa's infrastructure, education system, justice system and many other key government functions. Credit unions, who are offering almost identical services as banks, pay no taxes on their profits.
• The State keeps coming up short on revenue and is having to make cuts in most areas of the budget, yet credit unions continue to enjoy a tax exempt status and are contributing nothing toward these vital state government services.
• Credit unions claim they give all of their profits back to their members in the form of lower rates on loans and higher rates on savings. But, the facts don't support that claim! Just look around - the mega credit unions are building lavish office buildings and facilities, paying generous executive salaries, funding enormous political advertising campaigns, and occasionally even purchase naming rights to sports and convention facilities. These are not acceptable traits for legitimate nonprofit organizations.
• Each time a customer leaves a tax-paying bank and opens an account with a credit union, your State and community loses and we all end up footing the bill.
  
• The facts also show that the mega credit unions are most interested in serving affluent customers and neighborhoods, and are not serving less desirable customers and areas of communities as community banks do.