| Show tax question Ou estion spotlights spectacular growth of operative cooperative co movement in U S in recent years private business complains of disadvantage coops co ops volume tops five billion dollars dy by AL JEDLICKA when congress ponders a new revenue bill this fall one of tile the major propositions under discussion will be the taxation of operatives cooperatives co under pressure of established taxpaying tax paying enterprises terp rises the solons can be expected to comb the situation thoroughly since the rapid growth of operatives cooperatives co in the present century not only poses the question of tax equality but also of maintenance of revenue but though the question of taxation itself appears to head up the operative cooperative co question now there are other and even more deeply rooted underlying causes principally the move ments threat to the traditional american business system in this respect the whole cooperative development may well shape as an economic evolution though frequent cycles have robbed it of the consistency necessary for historical reform at the present time however Arfie american rican operatives cooperatives co are on a rising tide with the strongly established farm organizations numbering members being steadily complemented by urban consumer and manefa manufacturing C groups during the season rural marketing and purchasing operatives cooperatives co alone did over 5 billion dollars worth of business mostly on a tax free basis As a result of the steady growth of operatives cooperatives co spearheaded spear headed by the farmer associations and their extension into various fields bradl traditionally tio nally established american businessmen ore are stirring uneasily whereas only the handler and supplier of agricultural products arid and material formerly had been pressed by the operatives cooperatives co competition now has been extended to manufacturers rs ri of farm machinery hardware paints electric refrigerators washing machines toasters clocks cigars cigarettes ettes lipstick tires and batteries in in addition operatives cooperatives co now drill wells own pipe lines refine petroleum possess timber tracts write insurance and operate banks telephone companies companie s and electric power installations from the beginning the co opera tive movement assumed the nature of ofa a joint enterprise for ber performing forming a non profitable service tor for each participants individual welfare though contemporary history traces the real origin of the C cooper co o oper active movement back to rochdale rockdale Roc hdale england where poor working people organized n grocery coop co op in 1844 to avail themselves of cheaper food some historians credit the birth of the movement to local farm groups which banded together in the U S in the to reduce insurance aurance costs following the establishment of the local insurance rafice groups the cooperative amov movement ement assumed anther another form in the V U S after the civil war in the tha national farm grange a social and educational organization also bent upon relieving stringent economic conditions eventually turning to operative cooperative co methods to attain its early objectives th the e grange failed in promoting a purchasing coop co op because ot of the of agents bogged in pushing consumer coops co ops partly as a result of the panic of 1873 tind and gave up tip a farm machinery manufacturing coop co op following overproduction and under servicing As the operative cooperative co movement began to take root here during world war I 1 and congress recognized it as on an instrument for aiding the farm producer prof icer legislation was ten acted to afford tax relief to operators in DIG 1916 congress stipulated that farmers fruit growers and like associations organized and operated on a operative cooperative co basis and acting as selling agents for their members should not be requested to pay an income tax on earnings in subsequent legislation the solons colons provided that cooperatives co could purchase as well as sell for producers deal with non members as well as members become corporations po rations and pay interest afi on stock and not be prosecuted under the antitrust anti trust laws the government also set up a federal agency to loan money to cooperatives in 1021 with the financial machinery expanded through the tha farm credit act of 1033 in 1933 the tha securities act also permitted coop co op cratl cra tives ves to sell equities without prior ap approval of the securities and exchange commission which exercises that right over corporate issues though historians claim for the U S the credit for the birth of the operative cooperative co movement the roch dale enterprise of 1844 still receives general recognition tor for establishing the three general principles under which operatives cooperatives co widely function today these principles include 1 L one vote to each member regardless gard less of stock holdings 2 distribution of net savings to patrons in proportion to their purchases 3 limited fixed interest on capital it shares instead of variable and unlimited dividends organization Organ hatton of farm coops co ops is relatively simple with the pattern m au aided to give each member an L equal controlling interest in the operations upon subscribing for capital stock or paying a member ship shiofee fee the local group then adopts bylaws by laws and elects a board of directors A mar manager iager is hired policies outlined and facilities secured although in charge the manager remains under supervision of the directing board in addition to observing the roch dale principles in voting savings distribution and stock payments local groups often confine ownership to farmers raising products handled by the coop co op restrict securities transfers and limit the amount of shares a member may hold while operatives cooperatives co are generally organized on the local level they Y vl v 4 kv q X I 1 Q usually affiliate with regional groups to obtain maximum efficiency of operation with the regional bodies in turn sometimes combining with national associations but in any case tho the local group retains a voice in the broadened organization through the selection of delegates while membership fees stock sales and reserves provide working capital operatives cooperatives co borrow on a large scale to finance operations a study ot of the farm credit adminta bration in 1939 revealing that approximately one half of tho the coops co ops then existent resorted to loans while figures show chow members of farm marketing and purchasing coops co ops the actual number of individuals participating in the move movement T ent may be considerably less 8 since ce a person may belong to MO more re than he one organization with wit units and members the farm arm marketing cooperatives do by tar far the largest business with edth activities totaling almost handling of dairy products accounted for livestock grain dry beans and rice cotton and its products fruits end and vegetables poultry and eggs tobacco wool Q and mohair nuts and miscellaneous I 1 for mhd 2778 purchasing coops co ops 1 with acco members total busl busi I 1 ties ness for the season was placed at 4 seventeen major regional procurement organizations izat ions ione alone secured of teed feed of gas oil and grease of fertilizer and of seed never as successful in the U S as in britain american urban or consumer coops co ops are insignificant alongside of the farm organizations it has been figured that there are no more than units at the most with members doing about business annually though consumer labor coops co ops have failed in the past the CIOs entrance into the field on a limited basis bears watching anew with the union tactics apparently ly aimed at making up future tighter wage rates by reducing staple living costs in singing the praises of farm coops advocates describe tho the movement as a means of putting the count rys gigantic rural plant on a more cmcleaf basis with resultant profits to the producer this increased em clency elency can be attributed to both the size of cooper co oper atiles and the nature of their ownership by banding together farm ers are able to purchase goods at lower prices and group distribution results in hi smaller overhead and decreased handling charges by owning the business of course cooper co oper acors avert dealers margins though tax exempt operatives cooperatives co have been the target of competitive businesses comb complaining laining of their tax preferment R wayne newton manager of the national association of operatives cooperatives co declares that the increased return of farmers results in payments of higher individual income taxes at the same time newton says the larger profits enable operators to spend more on merchandise in the local communities charges that coops co ops are making huge profits on their operations only serves to emphasize the size of margins formerly enjoyed by private dealers newton avers by banding together tor for operative cooperative co operations farmers have tended to offset their I 1 M A za V K V successful cops coops co ops ps include refinery refiner kt at mcpherson kan han top and grain elevator of f indiana farm bureau at i indianapolis ind previous disadvantage of being compelled to sell their products on a flexible open market and buy on a more or less rigid retail price level he further states in spearheading spear heading the opposition to 10 tax exempt operatives cooperatives co the na tax equality association points to the tact fact that coop co op reserves retained after patronage refunds remain untaxed thus enabling them to do business at lower cost while also permitting continuing expansion As a result the asserts operatives cooperatives co are growing at a rate of 10 times that possible for taxpaying enterprises not only that but many tax pay ing corporations have shifted to a tax exempt status either through acquisition by operatives cooperatives co or by the voluntary action of stockholders declares As examples president ben mccabe cites the northern california holdings of the red river lumber company bought by the fruit growers supply company a subsidiary of the california fruit growers exchange with a loss to the U V S treasury of nearly a year in tax revenues the ohio cultivator company of bellevue ohio purchased by the national farm machinery cooper co oper active inc with a loss of about annually to uncle sams coffers and the globe refining company of mcpherson kans ta kenover by the national operative cooperative co refinery association against the background of already established operatives cooperatives co and the shift of some taxpaying tax paying enterprises to a nonpaying non paying coop co op basis mccabe also cites the possibility of the growth of labor sponsored consumer organizations which would remain tax free on two counts one because ownership would be vested in n tax exempt unions and two because they would distribute ea earnings rn before computing their levies levie S |
