Iowa’s largest credit unions would be taxed at the same rate as banks if a bill that cleared the Senate Commerce Committee becomes law. Senator Jeff Angelo, a republican from Creston, says under the current system, credit unions escape the five-percent “equity” tax because they’re classified as non-profits. He says the central question is at what point are the credit unions operating as a direct competitor to banks.The bill specifically proposes taxing the state’s six largest credit unions that have more than 150-million dollars in assets and reserves. Senator Steve Kettering, a republican from Lake View who is a banker, says those credit unions have evolved into full-service financial institutions. He says they have taken advantage of liberal fields of membership. He says the line between credit unions and other financial institutions is a blurr and has allowed them to gain market share. Kettering says in difficult financial times, everyone should pay their fair share of taxes. Senator Matt McCoy, a democrat from Des Moines, says the six largest Iowa credit unions are reaping about 30-million dollars in profits per year, and would have to pay about a million and a half in taxes to the state if the bill becomes law. McCoy says those credit unions are only paying 150-thousand dollars in state taxes per year, and it’s only fair to tax them at the same rate as the banks with which they’re competing. But Senator Bob Brunkhorst, a republican from Waverly, argued smaller credit unions will suffer if the bill becomes law because the large credit unions will switch to federal charters, and that’ll mean smaller credit unions will have to bear more of the cost of state oversight.Senator Joel Bolkcom, a democrat from Iowa City, defended credit unions, as one of the six that’d be taxed is in Iowa City. He says banks in his community hold about 87-percent of the market and it’s a very competative environment. The six credit unions that’d be taxed if the bill becomes law are the John Deere Community Credit Union in Waterloo, the Collins Credit Union in Cedar Rapids, Dupaco and Du Trac in Dubuque, the Greater Iowa Credit Union in Ames and the University of Iowa Credit Union. According to an analysis from the Iowa Bankers Association, those six credit unions have over two billiion dollars in assets. Bankers from around the state packed the committee room and rallied at the statehouse yesterday in support of the bill. Credit unions staged a similar rally on Monday.
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