The taxation of co-operatives has long been the subject of debate among lawyers and economists. The focus of this debate has, for the most part, been on a comparison of the taxation of co-operatives with the taxation of corporations, and the relatively "favorable" tax treatment of the former. The principal purpose of this note is not to restate the arguments surrounding this controversy. Rather, it is to suggest the possibility that the "favored" tax status of the co-operative can best be understood by looking not to the arguments usually advanced by the supporters of this status, but to the difficulty of imposing and administering the corporate income tax where the co-operative is concerned.
