| Show tax question Ou estion spotlights spectacular growth of cooper operative cooperative co oper active movement in U S in recent years private business complains of disadvantage coops co ops volume tops five billion dollars by ByAL AL JEDLICKA when congress ponders a new revenue bill this fall one of the major propositions under discussion will be the taxation of coop co op era tives under pressure of established taxpaying tax paying enterprises 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 hea head 1 I up the operative cooperative co question now there are other and even more rooted underlying causes principally the movements threat to the traditional american busi ness system in this respect the whole operative cooperative co development may well shape as an economic evolution though frequent cycles have robbed it of the consistency sis tency necessary for historical reform at the present time 9 however american operatives cooperatives co are on a rising tide with the strongly established farm organizations numbering members being steadily complemented by urban consumer and manufacturing groups during the reason season rural marketing and purchasing co operatives cooperatives alone did over 5 billion dollars worth of business mostly on a tax free basl basis i 5 As a result of the steady growth of operatives cooperatives co spearheaded spear headed by the farmer associations and their extension into various bariou fields traditionally tio nally established american businessmen are stirring uneasily whereas only the handler and supplier of agricultural pi products and material formerly had been pressed by the operatives cooperatives co competition now has been extended to manufacturers rs of farm machinery hardware paints electric refrigerators washing machines toasters clocks cigars cigarettes lipstick tires tire 9 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 from the beginning the co opera tive movement assumed the nature of a joint enterprise for performing a non pr profitable service e for each participants ind individual vidual welfare though contemporary history traces the real origin of the cooper co oper active movement back to rockdale rochdale Roc Roch hdale daIe england where poor working people organized a 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 costs following the establishment of the local fire insurance groups the ca cooperative movement assumed another form 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 co operative cooperative methods to attain its early objectives the grange failed in promoting a purchasing coop because of the of agents bogged in pushing consumer coops co ops partly as a result of the panic of 1873 and gave j up a farm machinery manufacturing na coop co op following overproduction and under servicing As the operative cooperative co movement began g an to take root here during world war I 1 and congress recognized it as an inspru instrument ent for aiding the farm producer legislation was enacted to afford tax relief to operators in 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 salons provided that operatives cooperatives co could purchase as well as sell for producers deal with non members as well as me members bers become corporations po and pay interest on stock and not be prosecuted under th the antitrust anti trust laws the government also set up a federal era agency to loan money to cooperatives in 1921 with the 11 financial in ancial machinery expanded through the farm credit act of 1933 in 1933 the securities act also permitted co coop op era tives to sell equities without prior approval of the securities and exchange commission which exercises that right over corporate issues though historians claim tor for th the e U S the credit for the birth of the operative cooperative co movement t th the e roch dale enterprise of 1844 s still ti 11 receives general recognition for establishing the three general principles under which operatives cooperatives co widely function today these principles include 1 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 shares instead of variable and unlimited dividends organization of farm coops co ops is relatively simple with the pattern to give each member an equal controlling interest in the operations upon subscribing for capital stock or paying a membership fee the local group then adopts bylaws by laws and elects a board of directors A manager is hired policies outlined and facilities secured although in charge the manager L remains under supervision of the directing board in addition to observing the roch koch dale principles in voting savings distribution and stock payments payment local groups often confine ownership to farmers raising prod products act s handled by the co coop op restrict securities transfers and limit the amount of shares a member may hold while operatives cooperatives co are generally organized on the local le level vel they usually affiliate with regional reki groups to obtain maximum efficiency of operation with the regional 01 4 4 10 A bodies in turn sometimes combining with national associations but in any case 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 f finance cnance operations a study of the farm credit 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 pul purchasing chasing coops co ops the actual number of individuals participating in the movement may be considerably less since a person may belong to more than one organization with units and 2730 members the farm marketing cooperatives do by far the largest business with activities total ling almost handling of dairy products accounted for oo livestock grain dry beans and rice cotton and its products fruits and vegetables poultry and eggs 13 oooo tobacco wool and mohair nuts and miscellaneous for the 2778 purchasing coops co ops with members total business for foi the season was placed at seventeen major regional procurement organizations izat ions alone secured of feed 2000 of gas oil and grease of fertilizer and of sl seed ed never as successful in the U S as in britain american urban or consumer coops co ops are ins insignificant a longside 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 in the past the CIOs entrance into the field on a limited basis bears watch ing anew with the union tactics apparently patently ly aimed at making up future tighter wage rates by reducing staple living costs in singing the praises of farm coops advocates describe the movement as a means of putting the count rys 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 creased handling charges by owning the business of course coop co op orators avert dealers margins though tax exempt operatives cooperatives co have been the target of competitive businesses complaining 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 n payments of higher individual income 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 ohly serves to emphasize the size of margins gins formerly enjoyed by private dealers newton avers by banding together r for co operative cooperative operations farmers have tended to offset their previous disadvantage of being corn com P xe X e 5 y 0 A J S successful fcc ucc coops co ops include refinery at mcpherson kan top and grain elevator of indiana farm bureau at India indianapolis napoli S ind belled to sey sev 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 tax exempt co operatives cooperatives 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 pay ing corporations have shifted to a tax exempt status either through a acquisition c 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 S treasury of f 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 drefin refining 1119 company of mcpherson K kans ans taken over by i the national cooperative co operative refinery association against the background of a already established operatives cooperatives co and the shift of some tax taxpaying 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 tax exempt unions and two because they would distribute earn 1 ings bafo before fe computing their air levies |
