Evening star., 1947-07-10
(Last of a Series.)
By Robert S. Allen

By Robert 5. Allen
The tremendous sum Of $5,0O0,-
900, 900 was estimated today by Gov
ernment tax experts as the amount
of business now being done an
nually in the United States by tax
exempt farm co-operatives.
The estimate Is based on pre-
liminary study Of new tax returns
these organizations were required
to submit this year to the Internal
Revenue Bureau.
The $5,oOO,O0o,ooo estimate indi-
Gates an increase Of $500, ,000. 900
over the 1945 business volume OF
these tax-exempt organizations.
That Is the last year on which the
Treasury Department has any DEL
mite figures.
Contrasting Figures.
Two significant contrasting facts
were pointed out in report by the
Joint Committee on Internal Reve-
nue. Taxation on the $500, 900 600
business done by farm co-operatiVes
in 1945:
1. That the figure represented a
1876 per cent increase in a seven
year period.
2. That during this period farm
prices advanced only 10 per cent.
On the basis Of the new forms
received authorities estimate that
there now are more than 10000 OF
all types of tax-exempt farm CO.
operatives engaged in business in
the United States. This indicates
an increase of more than Is per
cent since 1945. The joint commit
tees report that year put the num-
Der at 7,433.
The new forms that all tax-ex-
empt organizations were required
to submit to the Internal Revenue
Bureau this year are part OF q
Treasury congressional plan to plug
up outdated 'tax avoidance" loop
holes under which hundreds Of mil
lions of dollars of income are escap-
ing taxation annually.
First Study Of Problem.
In the first study ever made o1
this problem the joint committee
declared that on the basis of COM
plete returns filed in 1943 more
than $4,000 tax-exempt organiza-
tons reported incomes totaling more
than $4,000, ,000,0 900.
The new form that farm CO.
operatives and other tax-eXempt or.
ganizations were required to sub.
NIT this year marked a far-reach-
ing departure on such returns.
Until this year, this form CNo
800 was a cursory affair. 1t pro-
vided the Government with only
general information on the opera
tions, holdings, receipts and dis
bu-sements of tax-exempt organ
izations. But the new and greatly
enlarged form requires detailed data
on all their activities.
Illustrative of this Is the new
section IA of the form devoted to
farm co-operatives.
Under this section they now are
required to report the number OF
shares of voting stock owned by
farmers and nonfarmers, the differ
ences in charges made in both cate
gories, the sales to, purchases for
and patronage dividends" paid to
members and nonmembers; the
amount Of business done with Gov
ernment agencies and specific in
formation on income, dues, assess
ments, disbursements, wages and
all other receipts and expenditures
Politically Explosive.
In other words, for the first time
farm co-operatives and all other
tax exempt organizations are re-
quired to file returns on their activ-
tiles comparable to those that have
long been made by corporations and
individuals.
The farm co-operatives problem
is the most politically explosive OF
the whole tax-exempt issue.
Hundreds of these organizations
exist in every State in the Union
It Is estimated their total member
ship is well over 5,500,000 They are
particularly strong in the Middle
West.
Illustrative Of the political COM
plexity of this aspect of the tax
exemption problem is the fact that
Chairman Knutson of the House
Ways and Means Committee, comes
from Minnesota, high among the
States both in number and size OF
farm co-operatives.
The House Ways and Means Com
mittee originates all tax legislation
The committee will be the first
major battle-ground in next winters
fight to correct the widespread
abuses now admittedly existing
under the 30-year-old tax-exemp.
ton clauses of the income tax law
Leaders of the movement to plug
up tax avoidance" loopholes now
available to farm co-operatives are
independent jobbers and retailers
They charge that these exemptions
give the farmers organizations un.
fair competitive advantages.
}, Leader of the defense for the