Pub. 1 2013 Issue 2

www.uba.org 4 State Legislature General Session Review A s we emerge from the fury of the State Legislature’s General Session, I look back on numerous occasions during the past 45 days where I could be guilty of getting lost in the details. The saying, “You can’t see the forest for the trees” comes to mind. With hundreds of bills on a variety of is- sues, it seems impossible at times to maintain your view of the big picture. The really successful statesmen on the Hill are not only able to maintain their own perspective during the heat of the battle, but they are able to raise the perspective of others. We look to them, we admire them and we ap- preciate their vision. We are blessed with many such statesmen in the Utah legislature, and we are fortunate to have one in the Governor’s office. Nonetheless, I am so thankful that our legislative session lasts only 45 days. You can imagine how lost we could get if this process went year round. Just look at the state of affairs inside the Washington D.C. beltway. The massive size of the national debt is impossible to lose sight of and equally impossible to defend. But as Congress wrestles with the national debt, and debates tax policy and the proper levels of spending, there are a lot of policy makers who have lost sight of the forest on account of the trees. Nowhere is this more evident than the debate over the tax-exempt status of the large, bank-like credit unions. It would seem obvious as we defer trillions of dollars of obligations onto our children and their children (and probably their children) that a highly profitable, multi-billion dollar busi- ness that no longer operates like a credit union should pay taxes on their retained profits just like every other business in America. I understand, the power to tax is the power to destroy. But taxes alone are not inherently destructive. On the contrary, the taxes levied and collect- ed and subsequently spent on roads and infrastructure create economic efficiencies that yield far more wealth than that which was consumed to cre- ate them. Additionally, our freedom to engage in commerce and pursue happiness is only maintained through the collection of taxes in support of the greatest military in the world. Taxes become destructive when they are too high, or when they are applied discriminatorily. There will always be a debate about what level of taxation is too high. But there is no debate that when taxes are applied to one competitor differently than another, economic destruction will always oc- cur. It is easy for members of Congress to campaign against high taxes, but they can’t claim to be truly concerned about the destructive powers of taxa- tion if they continue to turn a blind eye to the destruction caused by cur- rent tax policies that pick winners and losers in the free market. This economic destruction is espe- cially devastating when it occurs in the banking sector. Because of the way banks leverage their capital, ev- ery dollar of wealth destroyed in the banking sector by f lawed tax policy results economic losses up to ten times bigger. The ability of individual Americans to deploy their wealth in the banking system, leverage it with insured deposits and prudently lend it to grow our economy and build more wealth is what makes the American economy the envy of the world. The existence of tax policies in the bank- ing sector that pick winners and losers and distort how capital is deployed are particularly destructive to the overall economy. Any Congressman who uses their op- position to higher taxes to justify the continuation of the discriminatory tax benefits received by large, bank-like credit unions has clearly lost sight of the forest for the trees. Applying the same tax policies to similarly situated competitors is not higher taxation - it is fair taxation. After all, it was the decision of these credit unions to begin operating like a bank. The fact is, if this discrimination continues, the T he B ottom L ine By Howard Headlee, President