| Show tax Ou question estion spotlights spectacular growth of operative cooperative co movement in U S in recent years 4 business complains of disadvantage coops co ops volume tops five billion dollars by AL A JEDLICKA when congress ponders a new revenue bill this fall one of 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 af tax equality but also of maintenance of revenue but though the question of taxation itself appears to head up the operative cooperative co question biow now there are other and even more rooted underlying causes principally the move merits 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 american operatives cooperatives co eire are on a a rising tide with the strongly established farm organizations number ing members being steadily complemented by urban consumer and manufacturing 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 a result of the steady growth ol of operatives cooperatives co spearheaded spear headed by the farmer associations and their extension into various fields fieldi traditionally tio nally established american businessmen are stirring uneasily whereas only the handler handier and supplier ol of agricultural products and ins material aerial formerly had been pressed by the operatives cooperatives co competition now has been extended to manufacturers rs 0 of farm machinery hardware paints electric refrigerators rit washing machines toasters clocks cigars cigarettes lipstick tires and batteries in addition operatives cooperatives co now drill wells own pipe lines refine petroleum possess timber tracts write insurance and operate banks telephone companies and electric power installations prom from the beginning the co opera tive modem movement ent assumed the nature of a joint enterprise tor for performing a non profitable service for tor each each participants individual welfare though contemporary history traces the real origin of the cooper co oper active movement back to rochdale rockdale Roc hdale england where poor working people organized a grocery coop co op in 1844 to avail themselves ot of cheaper kneaper 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 costs following the establishment of the local fire insurance groups the cooperative movement assumed another form to in the U S after the civil war in the national farm grange a social and educational organization also bent upon relieving stringent economic conditions eventually turning to operative cooperative co meth to attain its early objectives the grange failed in promoting a purchasing coop co op because of the of agents bogged in pushing consumer coops co ops partly as a result of the panic of 1873 and gave up 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 an instrument for aiding the farm producer legislation was enacted to afford tax relief to operators in 1816 1916 congress stipulated stipulate d that farmers fruit growers and me like associations organized and operated on a operative cooperative co basis and acting as selling agents tor for their members should not be requested to pay an q income tax on earnings in subsequent legislation the solons provided that operatives cooperatives co could purchase as well as sell for producers deal with non members as well as members become corporations po rations Jons and pay interest 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 1921 with the financial machinery expanded through the farm credit act of 1933 in 1833 1933 the securities act also permitted coop co op era tives to sell equities without prior approval of the securities and exchange 7 commission which exercises that right over corporate issues though historians claim for the U S the credit for or the birth of jhb coa operative cooperative co pera tive movement the roch dale enterprise of 1844 still receives general recognition for or establishing the three general principles winder under which operatives cooperatives co widely function f un c tion today these principles include e I 1 one vote to each member regardless gard less of stock holdings 2 distribution of net sayings to patrons in proportion to their purchases 3 limited fixed interest on capital itai shares instead of variable and unlimited dividends organization of farm coops co ops Is relatively simple with the pattern m to give each member an equal controlling interest t in the operations upon subscribing for capital stock or paying ii a membership fee the local group then adopts ad bylaws by laws and elects a board of directors rec A manager Is hired policies outlined and facilities secured although in charge the manager remains usually affiliate with regional groups to obtain maximum efel clency of operation with the regional bodies in turn sometimes combining with national associations but in any case the local group a voice in the broadened organization through the selection of delegates while membership tees fees stock sales and reserves provide working capital ca pital operatives cooperatives co borrow on on a large scale to finance operations a study ol of the farm credit adminis administration in 1939 revealing that approximately one half of the coops co ops then existent resorted to loans while figures show members of farm marketing and purchasing coops co ops the actual number of 0 f individuals participating in the movement may be considerably less since a person may belong to more than one organization with units and members the farm marketing cooperatives do by far the largest business with activities totaling almost handling of dairy products accounted tor for livestock oooo grain dry beans and rice cotton and its products fruits and vegetables poultry and eggs tobacco wool and mohair nuts and miscellaneous for the 2778 purchasing coops co ops with members total business tor for the 1943 44 season was placed at seventeen major regional procurement organizations izat ions alone secured ODO of feed of gas oil and grease of fertilizer and of seed never as successful in the U S as in britain american urban or co consumer 1 I coops co ops are insignificant alongside of the farm organizations it has been figured that there are no mare more than units at the most with members doing about business annually tho though r co con n sumer burner labor coops co ops lave have f tailed led i in n the past the CIOs CIO entrance into the field on a limited bails basis bears watching anew with the union tactics apparently patently ly aimed at making up future tighter wage rates by reducing staple living bostl costs in singing the praises of 0 farm arm calf ops aps advocates describe the movement as a meins means of putting the country count rys s gigantic rural plant on a more efficient basis with resultant profits to the producer this increased efficiency can be attributed to both the size of cooper co oper atiles and the nature of their ownership by banding together farmers are able to purchase goods at lower prices and group distribution results in smaller overhead and decreased handling charges by owning the business of course cooper co CD oper acors avert dealers margins though tax exempt operatives cooperatives co have been the target of competitive b businesses usi nesses complaining of their tax pr preferment e ferment R wayne newton manager of the national assoria association ti n of operatives cooperatives co d declares that the tha increased return of farmers results I 1 in n 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 9 ins formerly enjoyed by private dealers newton avers by banding together for operative cooperative co operations farmers have tended to offset their j erecting board in addition to observing the roch aj dale ale principles principle in voting savings distribution and nd stock payments local groups often confine ownership to 0 farmers raising products handled la 18 by ly the coop co op restrict securities j jat transfers rn sers and nd limit the amount of oll Z scares ares i a member may hold ais i iS while operatives cooperatives co are re generally n vs ft organized on the local level they it w sh S V vz 1 i fa M tl U A M 7 E 4 a B 4 ts B st ful coops co ops include refinery 4 at Alc Pheron ran top and grain elevator of indiana farm bureau at indianapolis ind previous disadvantage of being compelled t 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 national tax equality association points to the 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 lax pay ing corporations have shifted toa to a tax exempt status either through acquisition by operatives cooperatives co or by the voluntary action of stockholders stockholder s declares As examples president ben mccabe cites the northern california holdings of the red bed river lumber company bought by the fruit growers supply company a subsidiary of the california fruit grow growers ers exchange with a loss to the U 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 McP mcpherson herion kans taken over by the national operative cooperative co refinery association against the background of already established operatives cooperatives co and the shift of some som e 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 S organizations which would remain tax free on two counts one because ownership would be vested in tax exempt unions and two because they would distribute earnings before computing their levies |
