Pub. 2 2013 Issue 9

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 6 W HEN I AGREED TO PUT MY NAME in the hat for KBA Chairman, I had no idea that I would be leading the charge on an issue of “basic fairness” that would literally raise the eyebrows of my county commissioners and registers of deeds. What I have known for a long time is that I’m fed up with watching my customers face the burden of a state-imposed tax that for some strange reason doesn’t apply uniformly to all Kansans. Time and time again, I’ve had to explain to my customers that they will be assessed (taxed) 26 basis points (paid to the county’s general tax fund) for obtaining a mortgage from my bank, knowing that same tax burden magically goes away if he or she accepted an identical loan offer from the government-sponsored Farm Credit lenders we compete with. My frustration has manifested itself in grass roots action. As Chairman of the KBA, I have been an advocate for changing the status of this fee, or rather, tax. I was thrilled that our Kansas Agriculture Bankers Division started the conversation, out of many lenders’ frustration, when they found themselves and their customers in the very same situation I described above. The conversation started with a simple question: How can we level the playing field with Farm Credit? That question was considered by the 30-member KBA State Affairs Committee and KBA’s Board of Directors, and subsequently led to legislation being introduced in the 2013 Kansas Legislature that attempted to directly place the burden of paying the mortgage registration tax on the borrower. The theory was that Farm Credit’s federal exemption from paying all state and local taxes (except for property taxes) would not extend to the borrower. We soon learned that we were wrong... as long as the tax was tied to a Farm Credit’s mortgage, the mortgage was exempt from taxation. After learning how broad Farm Credit’s tax exemption is, our discussions then turned to eliminating the mortgage registration fee altogether. How else would tax-paying commercial banks be able to compete with Farm Credit, and how else would we be able to ensure our borrowers are not saddled with a discriminatory tax? As this idea worked its way through the KBA process, we learned other interesting facts – mainly that this was not just a rural issue. Bankers and their customers on the Missouri and Colorado borders face the same inequity because neither border state has a policy that taxes borrowing! As Kansas lenders on the east and west borders try to attract home owners and business development to the state, their rivals across state lines tout the lack of a mortgage tax as a huge competitive advantage. The KBA is now full steam ahead in advocating for the elimination of the Kansas mortgage registration tax. Knowing that this position will impact our friends at the county level, I have taken it upon myself to visit with county commissioners in each of the counties that United Bank & Trust serves. I believe it is incumbent upon our industry to tell the story. We must explain the reasons why this tax is inequitable and why it is a poor way to fund local government. We must also reassure our local government leaders that this stance is not meant to be antagonistic to our county governments, but is our effort to bring fairness, competitive equality and a chance to stop the policy of imposing a burdensome tax on a small segment of Kansans who need to borrow to buy property. KBA’s position statement on the page opposite this article provides the talking points needed to make the case that this unfair tax should be eliminated. Now it’s up to all of us to do the leg work necessary by reaching out to our register of deeds, county commissioners and state legislators to ensure we have tax policies that treat all Kansans fairly. That is my challenge to you, my banking colleagues! I hope you will join me in making the case for change! It’s Time for Us to Make the Case for Change By KBA Board Chairman LeonardWolfe, Chairman/CEO – United Bank & Trust, Marysville