Taxation of Cooperatives

Report Outline
Portwar Tax Treatment of Cooperatives
Extent of Tax Exemption of Cooperatives
Place of Cooperatives in National Economy
Taxation of Cooperatives in Foreign Countries
Special Focus

Portwar Tax Treatment of Cooperatives

The dollar volume of business transacted by cooperative organizations in the United States increased substantially during World War II. At the same time federal income and profits taxes, under which cooperative enterprises enjoy substantial advantages, were slicing heavily into the earnings of incorporated businesses. The apparent injustice of this unequal bearing of the tax laws has generated a movement for federal taxation of the earnings of cooperatives “under the same rules and at the same rates as private businesses are now taxed.”

The subject has received attention from the Small Business committees of the Senate and House, the Joint Committee on Internal Revenue, and the Bureau of Internal Revenue in the Treasury Department. It will shortly receive consideration from the Ways and Means Committee of the House and the Finance Committee of the Senate in connection with the second postwar revision of the revenue laws, to be undertaken at the 1946 session of Congress.

Movement for Repeal of Cooperative Exemptions

The movement for taxation of cooperatives on the same basis as profit-making enterprises is led by the National Tax Equality Association, Chicago, which claims to represent two million businesses, large and small. The association argues that the cooperative movement has long since come to maturity and is now well able to bear its fair proportionate share of the national tax burden.