Hundreds of credit union supporters rallied at the Iowa Capitol Wednesday to protest a proposed tax increase.
Senate Republicans passed a tax plan last week that would raise taxes on credit unions and lower taxes on banks, which is escalating the rivalry between the two types of financial institutions.
Jim Nussle is a former Republican Iowa congressman who now heads the Credit Union National Association. He referenced Senate Majority Leader Bill Dix’s previous statements in support of tax relief and said the credit union tax provision is a strange addition to the tax bill that lacks broad-based support.
“Well let me tell you, Majority Leader Bill Dix, when you tax a credit union, you’re taxing Iowans—600,000 of them—and we’re here to tell you that’s not fair, and we’re not going to stand for it,” Nussle said.
Banks have been pushing for higher taxes on the state’s largest credit unions, saying the current tax structure is unfair.
A spokesman for Bill Dix said in a statement Nussle has “spent too much time at [Washington] DC cocktail parties advocating for special interest tax deductions and protecting his crony capitalist friends.”
“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,” the statement reads.
The state’s largest credit union is the University of Iowa Community Credit Union.
The nonpartisan Legislative Services Agency estimates credit unions would pay $3.1 million more in state taxes by fiscal year 2023 and banks would pay $17.9 million less.
Pat Jury, CEO of the Iowa Credit Union League, said credit union members would see an impact.
“They would see…lower interest on savings rates and higher interest on loan rates,” Jury said.
Rep. Walt Rogers, R-Cedar Falls, said he’s a credit union member and he didn’t come to Des Moines to raise taxes on credit union members.
“I’m going to fight so we don’t raise your taxes, and there’s a lot of members in my caucus that believe that way too so we’re going to fight for you guys every day,” Rogers said.
House Republican leaders were noncommittal when asked if their tax bill will include this provision.