This is in response to Veridian Credit Union CEO Monte Berg’s Dec. 17 guest column. Bottom line up front: In 2016, Iowa banks paid $355.3 million in state and federal income taxes. Iowa credit unions paid $0 in income taxes.
Iowa bankers are not trying to eliminate competition as Mr. Berg claims. In fact, we welcome it. However, when that “competition” involves a subsidy by the Iowa taxpayer, all Iowans deserve to know more, and that is the purpose of this guest opinion. Every time a credit union is paid to deliver a product or service, that transaction, which would be taxable at an Iowa bank, is lost to the tax rolls. The situation described by Mr. Berg that existed 100 years ago is not the situation that exists today as it relates to large credit unions such as Veridian.
Mr. Berg touts credit unions as being cooperatively owned. I have a question for the members of Veridian Credit Union or any other credit union for that matter: When a member closes their account at a credit union, do they receive any equity? Of course not, that individual receives the balance in their account, the same as if the account were at a bank. The “profits” of a large credit union such as Veridian are oftentimes used to build extravagant offices and pay high salaries instead of paying a dividend to their members.
Many in the Cedar Valley remember when Veridian Credit Union was called the John Deere Credit Union, with membership open only to employees and family members of John Deere with all of them working together because they shared a common bond. Banks have no issue with this type of small credit union. That common bond and the intent of the original legislation created “almost 100 years ago” no longer exists, as large credit unions now refer to themselves as “community” credit unions and claim multiple states as their common bond. It may interest those in the Cedar Valley to know that Veridian now has offices in Nebraska, assets of $3.1 billion, made $18.7 million in 2016, with a total CEO compensation package totaling $593,269 (in 2015 per most recent 990 form available on GuideStar), and is the third largest financial institution in the state of Iowa. An average Iowa family of four pays $6,559 in state and federal income tax while this organization and every other credit union in Iowa pay nothing.
Another large Iowa credit union with offices in the Cedar Valley, DuPaco, boasted in its 2016 annual report that it had “members” in all 50 states and 17 countries. So while Mr. Berg states that “credit unions are helping 1 million Iowans every day,” it appears that they are also helping “members” in all 50 states and around the globe. Who is helping to subsidize this “competition” that Mr. Berg speaks of? The answer is the Iowa taxpayer. Iowa banks proudly pay our fair share to fund infrastructure, military, schools, and the social needs of our state and nation. Credit unions cannot make the same claim, as they pay no state or federal income taxes.
The largest credit union in Iowa and the second largest financial institution in the state, the University of Iowa Community Credit Union, made $56.5 million in 2016 and would have paid approximately $2.8 million to the Iowa treasury if they were required to pay taxes like a bank. How many teachers could be hired with that amount of money?
The next time you hear a large credit union CEO attempt to justify their outdated tax exemption, think about that school teacher who deserves a raise, the road in front of your home or business that needs fixing, our current mental health system that badly needs additional funding, or our military, and remember that you are helping to pay for their tax exemption. When someone pays nothing, the rest of us have to make up the difference. I urge the reader to contact your state and federal representatives and ask them to create a path to citizenship for large credit unions by requiring them to pay their fair share of taxes like the rest of us.