PALMER, ALASKA
DOROTHY M. BELL, Editor
■published every Friday at Palmer, Alaska, for the Matanuskn Valley
Farmers' Cooperating Association for the purpose of giving news of the
Associations work, problems, and accomplishments.
SUBSCRIPTION BY MAIL $1.75 BOX $1.00 SINGLE COPY 1‘0^
CO-OPERATIVES AND TAXATION
The Co-operatives of the Onited States with more than 3,000,000
members are facing their first large scale opposition in their history*
During the past 20 years Co-ops have had strong opposition from Private
business and Corporations, but this new opposition is a little differ
ent in its attack. It comes from the National Tax Equality Association
which is attempting to get legislation that will permit taxing of
profits, earnings, and dividends of all Co-ops. It has been Instigated
by members of the N.T.E.A. who are also members of big Corporation
Boards. Technically the opposition is different, bwt fundamentally it
Is coming from the same source as in former years. It simply has a new
suit of clothes and is more effective In its attack because of better
organization.
Let's take a look at the strength of the Co-operative movement in
the States and we can readily see the reason for so much concern among
Corporation heads. Leaders and educators have been very bold in their
statements that the day of Corporations, big business, and private
capitalism is coming to an end, and that the Co-operative movement is
moving in to take over. Ther4 are Farmers' Co-ops that rival major
Corporations in size. We have about 10,450 farmers Co-ops scattered
over the country. In 1943 they did $3,780,000,000. business w>ich Is
an increase of 33 % over the record established In 1942. Marketing
Co-ops did $3,030,000,000. while purchasing and distribution did
$750,000,000.
One Corporation head stated that if the Co-operative method of doing
business could be proven to be superior over private enterprisel : th' n
the Co-ops Should "dominate the field; but that the Co-ops shotild be
subject to income and excss profits tax on all profits and earnings
including patronage dividends.
io light this new oppositon the lenders of Co-operatives hrivo 1 ormed
a rival organization which has been called,"The National Association of
'Co-operatives", This association is also raising funds to reconstruct
Co-ops in the war devastated areas of the World, Evidently the Co-oper
atives are not only planning to put up a united front against the NTEA,
but also mean to strengthen the Co-op movement internationally.
Regarding the taxation of Co-operatives, the Farmers Union News
from Montana has this to say, "Despite clever propaganda to th- contrary
Co-operatives are not exempt fromttaxation. Generally speaking, they
pay taxes the same as any other business, such as state and local pro
perty taxes, excise taxes, transportation taxes on the movement of
goods or persons, taxes on communication services, social security and
unemployment insurance taxes, stamp taxes, use taxes, occupational
taxes, and other taxes on various commodities wherever other business
pays them.
Some associations which are not true co-operatives, pay income taxes
the reason, a true co-operative does not pay income taxes is that it
has no income to tax. Why? Because Farmers Co-operatives are Service,
not profit organizations.
Co-operatives operate on the basis of deducting from the returns to
the farmer for his products, or adding to the price of supplies purchaser
for the formers, an amount sufficient to cover estimated cost plus a
margin for operating contingencies, what is left after actual costs are
covered, belohgs to the farmer members or patrons, and is systemically
returned to him--even the margin left for contingencies if unused, is
returned, or set up on the books.
It is in no sense a profit to the association, it is a revolving fund
into which balances due the patron are from day to day accumulated,pend
ing settlement with the farmers, and from which excess contingency
charges are from day to day paid out."