Credit unions work well for Iowans

By Patrick S. Jury

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As Congress contemplates comprehensive tax reform, Iowa bank lobbyists see a great opportunity to feather their own nests, as evidenced by their recent opinion piece in The Gazette. In that piece, the bankers once again attacked the credit union not-for-profit tax status. The goal of their attack is to eliminate the legitimate competition posed by credit unions.

Congress should dismiss these self-serving efforts by the bankers and continue to support the credit union tax status, which gives Iowans a real choice in the financial services marketplace.

The reason for supporting the credit union tax status is clear: credit unions save Iowans money. From June 2012 to June 2013, Iowa Credit Union members saved nearly $90 million in the form of lower fees and better rates, as compared to what they would have paid at Iowa banks. In effect, removing the tax-exempt status of credit unions would be a $90 million tax increase on Iowa's more than 1 million credit union members.

From the largest in asset size to the smallest, Iowa credit unions earn their tax-exempt status and Iowa consumers are the beneficiaries. Iowa credit unions saved, on average, $162 for their member households last year. At a time when every penny counts in the pockets of consumers, that's real money. Along with Iowa families, small businesses also benefit from having credit unions as part of the financial services marketplace. The average credit union business loan in Iowa is approximately $180,000, and while that size of a loan might not mean much to a big box store or a national chain, it can be critical to the success of a Main Street Iowa small business - and their Iowa employees.

Bankers complain that credit unions have an unfair tax advantage, but they fail to mention how banks avoid paying taxes by claiming Subchapter S tax status, which allows banks to avoid paying federal taxes. The 198 Iowa banks that chose to operate as Subchapter S entities last year have nearly $36 billion in assets, almost four times the total assets of Iowa's credit unions. By choosing this tax status, these banks collectively deprived the federal treasury of more than $53 million in revenue in 2012. Nationally, Subchapter S banks cost the federal treasury $829 million last year.

Every year, the banking industry revives the same tired idea that taxing credit unions and their members is somehow good for our economy. They do this while holding themselves out as responsible stewards of the taxpayer's dollars. That's right, the people who nearly brought our nation to economic collapse just five years ago are hoping Congress will forget their reckless behavior and eliminate the competition posed by credit unions.

Common sense Iowans see through these cynical attempts by the bankers, and Congress should do the same.

Patrick S. Jury is CEO/President, Iowa Credit Union League. Comments: patj@iowacreditunions.com,