Document Type

Thesis - Open Access

Award Date


Degree Name

Master of Science (MS)




Attempts to reform South Dakota's tax system will undoubtedly affect cooperatives. The economic viability of cooperatives depends in part on the economic impact of the tax system. Since cooperatives play a significant role in the South Dakota economy, it is necessary for policymakers to understand both how cooperatives will be affected by different aspects of the tax system and what consequence this will have for communities. The cooperative form of enterprise is dissimilar in many respects from other forms of economic enterprise (i.e., corporations, single proprietorships and partnerships). The economic philosophy of cooperative enterprise which forms the basis for developing its legal and economic nature poses a great source of misunderstanding in the area of taxation. There is a need to more fully understand what significance the relationship between cooperative and community has for the formulation of tax policy. Furthermore, since the economic nature of the cooperative differs from other forms of enterprise, it is necessary to determine how and why cooperatives are affected in a manner different from other economic enterprises. When these factors have been taken into consideration, policymakers will be in a better position to evaluate the impact of various tax proposals on cooperatives and formulate a tax system which is equitable and minimizes undesirable economic effects. The objectives of this study are: 1. to outline some general considerations in determining the importance of cooperatives to tax policy and tax policy to cooperatives 2. to ascertain why the difference in the economic nature of cooperatives and corporations requires differentiated taxation of net savings and net income 3. to determine how selected tax proposals, affect cooperatives and evaluate each proposal as a method of taxing cooperatives 4. to recommend on the basis of the information presented in this study which of the tax proposals evaluated is the most desirable method of taxing cooperatives. This study has been limited to farmer cooperatives. Included are farm marketing and supply cooperatives. However, it should be recognized that many of the general observations on tax policy and cooperatives are equally applicable to other types of cooperative enterprise. But the empirical analysis considers only farmer cooperatives.

Library of Congress Subject Headings

Cooperative societies -- South Dakota -- Taxation



Number of Pages



South Dakota State University