Creates taxonomy every time a content type is saved.

drupal_content_type_to_taxonomy.php

<?php

/*
 * Implements hook_node_update().
 */
function openedu_school_node_update($node) {
  if ($node->type == 'school' && isset($node->field_school_category['und'][0]['tid'])) {
    $term = taxonomy_term_load($node->field_school_category['und'][0]['tid']);
    $term->name = $node->title; //change existed taxonomy term
    taxonomy_term_save($term);
  }
}

/*
 * Implements hook_node_insert().
 */
function openedu_school_node_insert($node) {
  if ($node->type == 'school') {
    $vocabs = taxonomy_get_vocabularies();
    $vid = FALSE;
    foreach ($vocabs as $vocab) {
      if ($vocab->machine_name == 'school') {
        $vid = $vocab->vid;
      }
    }
    $term = new stdClass();
    $term->vid = $vid;
    $term->name = $node->title;
    $term->vocabulary_machine_name = 'school';
    taxonomy_term_save($term);
    $wrapper = entity_metadata_wrapper('node', $node->nid);
    $wrapper->field_school_category->set($term->tid);
    $wrapper->save();
  }
}

/*
 * Implements hook_node_delete().
 */
function openedu_school_node_delete($node) {
  if ($node->type == 'school' && isset($node->field_school_category['und'][0]['tid'])) {
    taxonomy_term_delete($node->field_school_category['und'][0]['tid']);
  }
}

/*
 * Implements hook_FORM_ID_form_alter().
 */
function openedu_school_form_school_node_form_alter(&$form, &$form_state) {
  unset($form['field_school_category']);
}