DES MOINES — About 500 Iowa credit union members packed the Capitol Wednesday to deliver a message to lawmakers who plan to raise taxes on them: “That’s not fair, and we’re not going to stand for it.”
They rallied outside the Capitol before going inside to buttonhole lawmakers about Senate File that would put banks and credit unions under the same tax structure.
Iowa banks currently pay a 5 percent franchise tax, while credit unions pay a tax worth 0.5 percent of their reserves.
A provision in a Senate-passed bill would have both pay a franchise tax of 2 percent on the first $7.5 million of annual profits and 4 percent on additional profits.
The Senate approved that change, 29-20, as part of the tax overhaul bill.
The GOP-controlled House is working from Gov. Kim Reynolds’ tax plan, which doesn’t include the credit union tax.
Credit union members prefer the governor’s approach.
“The governor introduced a great bill to reduce taxes, to reform taxes, to help be pro-growth, create jobs in Iowa,” former Iowa U.S. Rep. Jim Nussle said at the rally.
Now president of the Credit Union National Association, Nussle said it was strange that “somehow this provision got snuck in at the last minute.”
He fixed the blame on Senate Majority Leader Bill Dix, R-Shell Rock.
Dix and others who supported the bill seem to believe “that when they are taxing a credit union, they are taxing a building or they’re taxing an ATM machine or a vault or a mobile app,” said Nussle, who represented Eastern Iowa from 1991-2007 and was President George W. Bush’s director of the Office of Management and Budget from 2007-09.
What’s stranger, he told the rally, was that according to the majority leader’s website, “Bill Dix believes that Iowans pay enough in taxes," he said.
“You’re darn right, Bill. Don’t raise our taxes,” Nussle said.
Dix’s spokesman returned fire, saying Nussle has “clearly spent too much time at D.C. cocktail parties advocating for special interest tax deductions and protecting his crony capitalist friends.”
“It’s sad to see former conservative Jim Nussle go full Washington, D.C., in his criticism of Sen. Dix,” Caleb Hunter said. “The largest credit union in Iowa claims to return their tax-free profits to their members, yet somehow simultaneously that institution has $3 billion in reserves.”
Hunter said the Senate’s $1 billion-a-year tax cut, coupled with the $1,000 in tax relief that Republicans say average Iowans will realize from federal tax cuts, “makes Iowa a leader in fair, simple tax policy.”
“The only place you can find math like the kind Mr. Nussle calculated today is in the budget process in Washington,” he added.
The Iowa Bankers Association said credit union members are trying “to convince lawmakers to continue their free ride.”
“Today, Iowa credit unions are an $18 billion industry, making more than $182 million in profits annually,” the association said in a statement. “In fact, the state’s largest financial institution is the University of Iowa Community Credit Union — which made $70 million in profits in 2017 and paid no income taxes on those profits.
“Yet, the chief officer of that credit union has been vocal about having to chip in 3 percent of these profits to support higher education, health care and infrastructure for Iowa communities,” the statement said.