Shifting the Burden for Vital Public Services: Walmart’s Tax Avoidance Schemes

Source: Philip Mattera, Good Jobs First, February 2011

When Walmart seeks to add to its portfolio of more than 3,000 big‐box outlets in the United States, it invariably argues that the project will be a major economic benefit, generating a vast new stream of tax revenue. Actually, research shows the company will go to great lengths to limit the size of that revenue stream. Walmart is obsessed with cutting costs, and tax payments are one of its favorite targets. The company doesn’t just reduce its tax outlays; in hundreds of places it has sought taxpayer funds to finance its expansion and thus expand its market share.

For every kind of tax that a retail company would normally pay or remit to support public service, Walmart has engineered an aggressive scheme to pay less and keep more.

– It has extracted more than $1.2 billion in property tax abatements, sales tax rebates, infrastructure and site improvements, and other economic development subsidies from state and local governments around the country. In recent years the subsidies amounted to roughly $70 million annually.

– Using gimmicks such as deducting rent payments made to itself (through a captive real estate investment trust), it avoids an estimated $300 million a year in state corporate income tax payments.

– Using an army of lawyers and consultants, it systematically challenges property tax assessments to chip away at its property tax bills, costing local governments several million dollars a year in lost revenues and legal expenses.

– And it takes advantage – to the tune of about $60 million a year – of those states that fail to cap the “vendor discounts” they provide to large retailers for collecting sales taxes from their customers.

Leave a Reply