DES MOINES, Iowa — During a 90-minute public hearing here on tax reform legislation before the Iowa legislature, representatives of banks and credit unions “skirmished over provisions that weren’t part of the proposal,” according to one report.
As CUToday.info reported here, bankers in Iowa have launched an aggressive campaign in the state to require credit unions to pay the same 5% franchise tax they do. Credit unions in Iowa are already taxed on their reserves.
Banks have been sponsoring a multi-media campaign calling for an end to the “free ride” they say credit unions enjoy. Credit unions have responded by citing their member-owner status and stating they pose no threat to banks, which have 90% of the market share in Iowa. Newspapers across the state have been filled with letters to the editor arguing both sides of the issue.
“Things seem to be working,” Joe Hearn, CEO of Dubuque-based Dupaco Credit Union, was quoted by The Courier as saying during the public hearing.
But Dave Nelson of West Bank responded by arguing there is no justification for the tax “break” credit unions enjoy, according to the Courier. “When some don’t pay, the rest of us pay more,” he said.
The tax changes for credit unions have been proposed by Senate Republicans but are not part of House Study Bill 671, based on GOP Gov. Kim Reynolds’ proposal. “Conventional wisdom around the Capitol is the credit union tax won’t survive negotiations between the Republican-controlled House and Senate and the governor,” the Courier reported.
Credit unions have been dragged into the debate as the governor and legislators are seeking money to help offset a proposal to cut state income.