More Than 500,000 Iowans to be Negatively Impacted by Senate Tax Bill

February 26, 2018

Media Contact:
Matt Oakley
Iowa Credit Union League / AMC
515.612.7349
matt.oakley@affiliatesmgt.com

 

FOR IMMEDIATE RELEASE

More Than 500,000 Iowans to be Negatively Impacted by Senate Tax Bill

(Des Moines, IA) – Last week, Iowa Senate Republicans introduced their ‘Iowa Working Families Tax Relief Act’. This proposed legislation has been presented as a tax cut for Iowa’s working families, but in reality, the proposal increases taxes on more than 500,000 hard-working credit union members across the state.

Credit unions are not-for-profit cooperatives. Earnings made by credit unions are returned to the credit union membership through better rates and fewer fees, and in some instances, through dividends paid directly to members. Raising taxes on credit unions directly impacts their ability to save money for their members.

As just one example, last October Dupaco Community Credit Union in Dubuque directly returned more than $3.17 million collectively to nearly 49,000 members as part of its Thank Use campaign.

“Credit unions exist to promote the economic well-being of our members through a system that is member-owned, volunteer-directed and not-for-profit,” said Dupaco Chief Marketing Officer David Klavitter. “A tax on credit unions is tax on members. This would mean lower rates on savings, higher loan rates, and less convenience, fewer education tools like Bright Track credit scores, and reduced ownership dividends like Thank Use.”

Each year, the credit union business model saves Iowans $100 million in interest and fees. The proposed tax increase on Iowa credit unions will also impact the low rates and fees credit unions are able to offer on car loans, mortgages and small business loans. Approximately 85 percent of Iowa credit union loans are consumer loans.

"Taxing credit unions is a direct tax on our members," said Jeff Disterhoff, CEO of University of Iowa Community Credit Union (UICCU). "We are able to offer members lower rates and fees because credit unions are not-for-profit, member owned cooperatives. We are different from banks - our earnings go directly back into our members and our communities, not to fill the pockets of a select few shareholders. The proposed tax bill will cost UICCU members $2.2 million while in the same bill banks receive a 48% tax decrease.  The question remains, is a tax increase on credit unions good for all Iowans or just for banks?"

Iowa banks dominate the market in our state – they have nearly 90 percent of the state’s deposits and 95 percent of the state’s business loans, yet they are lobbying for an effort that will eliminate competition from credit unions in the marketplace.

“After receiving $152 million from the federal tax cut, banks are set to receive another $27 million from this proposed state tax benefit,” said Patrick Jury, president and CEO of the Iowa Credit Union League. “The credit union cooperative model would have dictated that such money be returned directly to members in lower rates, fewer fees or in direct payouts, however, banks have no regulations regarding payouts of earnings or how they could help out fellow Iowans.

“Iowa credit unions stand united in opposition to any tax increase on credit union members and will use every effort to protect the financial choice of working Iowans,” said Jury. “We will fight to support the preservation of the industry’s mission to put people over profits and to ensure the financial well-being of credit union members.”

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ICUL is the trade association that represents the interests of Iowa credit unions and their more than one million members. Credit unions are not-for-profit, financial cooperatives owned and operated by their members. Iowans use their credit union membership to receive higher interest rates on savings and lower interest rates on loans. For more information about ICUL and Iowa credit unions, visit www.IowaCreditUnions.com. Follow ICUL on Twitter at www.twitter.com/icul or on Facebook at www.facebook.com/iowacreditunions.

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