Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-09-30
The 'co-ops'

TEMPER 10 COuGAlHeu MI ArttClG
headed Are 'Co-ops' Legit-
imate--Or Just Smart Tax
Dodges?" The subheRds, doll
BILE Escape" and TAX Advan-
tage Crows" made the implied
answer clear to the most cur
sorry reader--co-ops are tax
lodges and illegitimate.
The more careful reader
would have found that the
writer did not even attempt to
establish either Of these con-
tentions. Far from saying that
co-ops are illegitimate, he said.
to anyone who read far
enough: There is nothing bad
about co-ops. They are . part
OF the American way Of life.
and millions OF Americans en-
joy their services and bene-
hts" To this statement we can
only say Amen" and that We
wish he had made it his theme.
Similarly the writer made
no attempt to show that CO.
ops are tax lodges" His real
thesis, not to be discovered in
the heading Of the article, is
that perhaps as much as half
a billion dollars is lost to the
Government each year because
co-operatives are not taxed on
the same basis as other corpo-
rations." Anyone willing to din
into the facts can readily dis
cover that this thesis is incor-
rect. Ia
In the first place. consumer
co-operativeS - such as the
Greenhelt and Rochdale CO.
operatives that serve residents
of Metropolitan Washington
are taxed on exactly the same
basis ~ other corporations.
They are corporations. use the
same tax forms as other corpo-
rations, pay the same tax rates.
There is nothing in the tax
laws or In tax regulations that
distinguishes them from other
corporations.
The writer makes quite .
point about co-ops not paying
taxes on patronage refunds.
The fact Is that no business.
coop or otherwise, pays taxes
ON refunds which 1t contracts
to make to its customers, and
that many nonco-op businesses
make such refunds.
The object OF the eo-opera-
tive's patronage refund is to
enable the cooperative to sell
TO its customers ut a. little
above cost IN possible. Mini
MIXING net income automatic
cally minimizes income taxes.
but can this be considered 3
tax dodge? 1t, is q practice
followed by the most respected
and successful American bust
nesses--concerns that operate.
as co-ops do, ON the theory
that businesses exist to get
goods to people as efficiently
and as inexpensively rs posi-
BILE.
Entirely comparable to coop
patronage refunds. at least
from the tax point Of view,
are the Dayy Crockett hats,
nauseous comic books, and
strange gadgets offered by
many firms as rebates to Gus
TONERS who turn in box tops
or cash register receipts. The
value Of these rebates is con-
sidered q valid business ex-
pense, deductible before deter
mining income tax. Should
co-ops be penalized because
their refunds are made in a
more sensible form?
The writer further states:
"Some (co-operatives) =. are
completely exempt" The fact
is that there Is q partial. not
complete. exemption available
to farmer co-operatives - an
exemption which is clothed
with so many restrictions that
more than half the farm CO.
OPS do not bother to take
advantage Of 1t. The exemp-
ton was set UP by Congress
because OF the serious eco
monte ditaculties that our
farmers have faced-its aim
was and Is to help farmers,
not co-ops. incidentally. on
cial estimates show the cost
to the Government Of this
exemption to be, not . half
billion dollars. but less than
fifty million dollars.
A year ago an article in The
Star pointed out that thou
sands Of Warrington families
are participating In consumer
co-operatives which they have
organized to supply them
selves with q variety OF goods
and services. 1t In unfortunate
that the more recent article
should unjustly characterize
Ah~t, ~a~A~-n vS1l . H~,a >~xkn 49, 4IJA-