States Lose When Credit Unions Acquire Banks

In recent years, credit unions have been on a bank acquisition spree. Since 2011, more than 100 credit union–bank purchases have been announced across the country, with Alabama, Florida, and Michigan accounting for nearly 40 percent of all deals. Unlike banks, credit unions remain exempt from most taxes. While some deals fell through or were stopped by regulators, many were finalized, leaving states and local governments with less revenue.

The credit union tax exemptionA tax exemption excludes certain income, revenue, or even taxpayers from tax altogether. For example, nonprofits that fulfill certain requirements are granted tax-exempt status by the Internal Revenue Service (IRS), preventing them from having to pay income tax. doesn’t make dollars, and now, it doesn’t make sense.