Iowa credit unions are claiming victory after the failure of a Congressional measure that would have imposed a tax on the state’s CUs while lowering taxes for the state’s banks.
Following a months-long campaign from the state’s bankers, Iowa Governor Kim Reynolds and state lawmakers have compromised on a tax reform package that keeps the credit union tax exemption in place in the Hawkeye State.
“The voice of the people was heard, and consumer choice wins over dollars in the pockets of bank shareholders. Iowa’s 1.1 million credit union members, along with all Iowa consumers, can continue to benefit from choice and competition,” Iowa Credit Union League President and CEO Patrick Jury said in a statement. “Amid continued consumer abuse by banks, this choice is needed more than ever. All consumers benefit from the competition that keeps rates and fees in check.”
Consumers from across Iowa reportedly sent more than 40,000 emails and 2,500 letters to legislators supporting the credit union tax exemption. Those efforts were in addition to a massive rally in March at the Iowa state capitol in Des Moines that drew more than 700 credit union supporters.
The victory also earned praise from Jim Nussle, president and CEO of the Credit Union National Association, and an Iowa native who spent several years representing the state in Congress.
“CUNA, CUNA Mutual Group and a host of partners from across the credit union system were proud to stand with the Iowa Credit Union League and Iowa credit union advocates in waging this battle from day one,” Nussle said in a statement. “While we expect these fights to continue as bankers push false narratives about not-for-profit, member-owned financial institutions, this is a moment to congratulate the excellent leadership of Pat Jury and the Iowa Credit Union League, and be proud of what our 360-degree advocacy offense and the CUNA/league system has accomplished.”
According to CUNA, credit union membership saves Iowans a collective $105 million each year by providing better rates and lower fees than for-profit banks, with consumer loans accounting for 85 percent of overall Iowa credit union portfolios.
Iowa credit union CEOs also thanked lawmakers for protecting CUs’ tax status.
“We are glad to finally put this issue to bed,” said Brent Helin, chair of the Iowa league board and CEO of Des Moines Metro CU. “The governor and legislature confirmed that the cooperative credit union choice is needed and puts money in the pockets of members and the communities in which they serve. Our industry remained united throughout the bank attacks and we look forward to being able to direct full attention to our mission of improving the financial lives of Iowans.”
Bankers vow to keep fighting
Despite the bill’s failure, the Iowa Bankers Association said its lobbying efforts resulted in “substantial progress made in raising awareness of this important issue and driving the issue forward.”
“This issue is not going away, and the IBA will continue to work on this issue in preparation for the 2019 legislative session,” the group said in a statement on its website. “Convincing the Iowa legislature to implement tax equity for all financial institutions will require a continued statewide effort from Iowa bankers as well. It will be important for Iowa bankers to visit with their legislators when they return to their home districts after session. Through such visits, bankers can share their stories face-to-face with lawmakers about how the mega credit unions’ tax exemption has impacted their communities.”
The IBA’s reference to “mega credit unions” was at the heart of another battle that came up during the tax fight, as a member of the state’s Board of Regents questioned University of Iowa Community Credit Union’s ties to the college and potential reputational risk. Similarly, as Credit Union Journal has reported, a national debate around CU taxation began earlier this year after Utah Sen. Orrin Hatch questioned the value of the credit union tax exemption.