Credit Union Tax Transparency

What is “House Study Bill HSB643” and why should everyone in Iowa support it? During this election year we’ve heard a lot about income tax, and paying one’s fair share. This concept is critical to the success of our state’s economy. Credit Unions pay very little tax on their income, unlike all other financial institutions which provide the same services. This Bill would require Iowa’s largest credit unions to disclose basic information about how they are using their substantial tax benefit. It will require the same disclosure of information that other “not-for-profit” entities must comply with.

The Bill would impact ten or fewer credit unions in Iowa. Those large, “complex credit unions” would then be required to disclose: total state income tax paid annually, information including executive compensation, and the basis for which they claim receiving a ‘low income’ designation.

The credit union industry does not currently report aggregate income tax paid as is required of other business industries. Moreover, while other not-for-profit entities report information such as executive compensation, only credit unions are allowed to keep this information secret from the public. Finally, the ‘low income designation’ greatly expands credit union powers (and their tax exemption) beyond their traditional charter but no one will clarify what the designation is based on.

The ten largest Iowa credit unions made in excess of $100 million in 2015, and paid a miniscule amount of income tax on those profits. Credit Unions were given non-profit status and chartered so that they could serve specific groups of people and to serve a social mission. They no longer serve only a select group of people and many now lack a specific social mission, to serve those that may not otherwise have access to financial services. Iowa taxpayers deserve to know just how much the credit unions’ tax benefit is worth and who is really benefiting from their subsidization.
The credit unions’ argument against this bill is that it “undermines Iowa credit union confidentiality laws”, however the language clearly states that the credit union regulator must use aggregate census data and not individual credit union member information. The credit unions’ real motivation in opposing this bill is they don’t want the Legislature, their members, or Iowa taxpayers to know anything about how they are using this very substantial tax benefit. All Iowans pay more when some don’t pay their fair share.

Please support HSB 643 and help shed some light on this issue for all Iowa taxpayers. I urge you to contact your State Representative, and ask for their support of HSB 643. Contacting your legislator is quick and easy, just click here – curt.hanson@legis.iowa.gov or dave.heaton@legis.iowa.gov
To search for other state elected officials, click here – https://www.legis.iowa.gov/legislators/find?address=&city=Fairfield