DES MOINES, Iowa–A proposed tax on credit unions was not included in a tax reform bill approved by the Iowa legislature that is expected to reduce taxes on Iowans by more than $2-billion over the next six years.
As CUToday.info has reported extensively, Iowa’s credit unions have been fighting an all-out effort by the state’s bankers, which 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.
The banks had been sponsoring a multi-media campaign calling for an end to the “free ride” they say credit unions enjoy. Credit unions 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.
Following passage of the tax bill the Iowa Credit Union League said it applauded the legislature for a package that “helps Iowans keep more of their hard-earned money and recognizes financial choice is needed in the marketplace.”
“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,” said Patrick Jury, President and CEO of the Iowa Credit Union League (ICUL). “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.”
According to the league, Iowans made their voices heard throughout the legislative session, sending more than 40,000 emails and 2,500 handwritten letters to legislators in support of the cooperative credit union structure. In addition, nearly 800 credit union members visited the Capitol in March to rally for their financial choice.
‘Glad to Put This Issue to Bed’
“We are glad to finally put this issue to bed. 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,” said Brent Helin, ICUL Board Chair and CEO of Des Moines Metro Credit Union. “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.”
The Iowa tax reform package passed the Senate along party lines, with all Republicans in support of the bill and all Democrats plus one Independent opposed. One Republican called it a “once-in-a-generation opportunity,” while one Democrat called it a “bobsled to bankruptcy.”
According to the Des Moines Register, the plan will reduce revenue by $2.1 billion over the next six budget years, end federal deductibility, create sales taxes on digital goods and services and reduce both individual and corporate income taxes.