Colorado Lawmakers Take Aim at Wal-Mart’s Tax Strategies

Wal-Mart to Audit Energy Efficiency of State Capitols
By Staff, Environmental News Service
February 25th, 2008_________________________________
As part of their focus this year on clean energy, the nation’s governors Saturday announced a partnership between the National Governors Association and Wal-Mart Stores, Inc. that is intended to reduce the overall energy consumption of state capitol complexes.

Under the Greening the Capitols partnership, a team of Wal-Mart energy experts will conduct a clean energy audit of up to 20 state capitol complexes during 2008 and 2009. They will identify energy efficiency improvements that could provide a return on investment within five years..

In 2005, Wal-Mart announced its sustainability policy which the company says incldues, “Aggressively pursuing regulatory and policy changes that will create incentives for utilities to invest in energy efficiency, to use low or no greenhouse gas sources of electricity, and to reduce barriers to integrating these sources into the power grid.”

The company will work with states to survey their state capitol facilities and suggest energy efficiency improvements based on technologies Wal-Mart has deployed in thousands of its buildings around the world.

There will be no up-front costs to the states for the audits. In addition to recommending efficiency improvements, Wal-Mart will provide estimates of the carbon dioxide emissions reductions that could result from increasing the energy efficiency of the state buildings.

The National Governors Association Center for Best Practices will help identify states for participation in the Greening the Capitols partnership and then will catalog the successes each participating state experiences.

The partnership with Wal-Mart was announced during the National Governors Association, NGA, winter meeting that wound up today in Washington, DC.

“From the discussions we’ve had these past three days, it’s clear that governors are leading the way to Americanize this country’s energy future,” said NGA Chair Minnesota Governor Tim Pawlenty. Each incoming NGA chair chooses an issue to work with during his or her term of office - Pawlenty’s is the Securing a Clean Energy Future Initiative.

All governors are asked to help make the United States a global leader in energy efficiency, clean energy technology, energy research and the use of alternative fuels.

“We’re on the verge of an energy revolution in this country,” said NGA Vice Chair Pennsylvania Governor Edward Rendell. “And it’s clear that charting our own energy future will require every available resource at America’s disposal, from clean coal and nuclear to biofuels and renewables.”

Today, the NGA officially released “Greener Fuels, Greener Vehicles: A State Resource Guide,” a new report from the Securing a Clean Energy Future Initiative.

The report provides an overview of the economic and environmental implications of an oil-dependent transportation sector and looks at state policy tools that can encourage greener transportation.

It describes the core barriers preventing wider consumption of alternative fuels and production of alternative vehicles, as well as examples of promising state policies designed to overcome these specific barriers.

Governor Pawlenty also shared with his colleagues the recently released Securing a Clean Energy Future Initiative publication, “A Call to Action,” a report declaring America’s current energy path unacceptable because of escalating economic risk and serious environmental consequences.

R. James Woolsey, venture partner with Vantage Pont and former director of the Central Intelligence Agency, addressed the governors about the “critical need to develop alternatives to imported petroleum,” the prospects for current and near-term technologies to reduce America’s oil demand and how states can serve as catalysts to advancing these technologies in the marketplace.

“We know there is no silver bullet to solve this crisis,” said Governor Rendell, “but when we add up all the steps states and individuals are taking across the country, we can begin to see the start of our energy revolution.”

The nation’s governors next convene for the National Governors Association Centennial Meeting July 11-14, in in Philadelphia, Pennsylvania.

Wonder how many of these states in this program have combined tax reporting? Wonder how much tax credits WalMart will get in this deal? Ed Rendell-Hillary’s longtime friend and supporter in Pennsylvania? Woolsey of the CIA?

La Dolce Vita, Walton Style

By Al Norman

Trying to beat taxes out of Wal-Mart is like banging on a Whac-A-Mole game. When you whack the mole down into its hole, another mole immediately pops out. The faster you whack with your mallet, the faster the moles pop up.

In Wal-Mart’s Whac-A-Mole Tax Game, when the state goes to grab its taxes, they disappear into a loophole, and when the government tries to close the loophole, Wal-Mart just opens up another one.

This week, the state of Massachusetts thought it had Wal-Mart whacked—but the retailer just ducked into another loophole. Governor Deval Patrick had proposed tax reform legislation that included “combined reporting,” an accounting system that treats a company with many subsidiaries across many states as just one company, and taxes that company based on the percentage of its business that is in the state, as measured by where its property, payroll and sales are made. It’s called closing corporate loopholes.

Realizing months ago that the Governor of Massachusetts was coming after them with a mallet, Wal-Mart hired three lobbying firms to dodge the blow. The retailer paid $208,678 in 2007 to protect its lucrative tax loophole—five times what the company had spent the previous year on lobbying.

Under current law in states which have only “separate reporting,” Wal-Mart pays rent to itself through a maze of eight corporate subsidiaries, including Real Estate Investment Trusts (REITs). The rent appears as an expense on state tax forms, and is deducted from its taxable revenues. Wal-Mart pays 2.5% of its gross sales monthly as rent to its own REIT, which then wires the money quarterly to Wal-Mart Property Company in the form of a dividend, which is then paid to Wal-Mart Stores as a tax-exempt “dividends received.”

All of these transactions are handled through a “cash management agreement” between the parties. Neither the REIT nor the Property Company ever had any employees. The REITs don’t pay taxes, as long as they pay 90% of their income out in dividends to shareholders. In Wal-Mart’s case, the REITs are owned by Wal-Mart subsidiaries, which are registered in Delaware, a state that has no corporate income tax.

Wal-Mart gets the benefit of the rent expense, but also gets the benefit of the non-taxed dividend, on the same monies. The dividends escape taxation, and the original rent that created the dividends is deducted from taxable income in the states where the “expense” is incurred. This complex game makes it almost impossible for tax regulators to follow the money.

But this week, when the Massachusetts General Court went to close the “separate reporting” tax loophole by adopting combined reporting, Wal-Mart offered a last-minute amendment on the House floor, which was adopted with no roll call vote, and no real debate. “It was somewhat embarrassing,” one Baystate lawmaker told The Boston Globe. The 2,300 word amendment allows a corporation to avoid taxes if they maintain a major portion of their business overseas.

This is the same Whac-A-Mole game being played in Illinois—a story that was narrated by the Wall Street Journal last November. Wal-Mart opened up an office in Florence, Italy—a country where it has no stores—and because Illinois tax rules only apply to profits made in Illinois---Wal-Mart avoided taxes by using its office in Italy as a tax Whac-A-Mole. The retailer put all its Illinois stores under the control of its own REIT.

The stores paid “rent” to the REIT, and deducted those rent payments as an expense from its taxable income. The REIT paid its money to a Delaware subsidiary. To get around combined reporting—which Illinois has—Wal-Mart created yet another Delaware company called WMGS Services, with an office in Florence. WMGS is owned by Wal-Mart Property Company. Because Wal-Mart Property is just a shell, owning no stores and having no employees, Wal-Mart can claim it’s a “80/20” company---that 80% of its workers and property are overseas.

When the Wall Street Journal paid the Florence Wal-Mart operation a visit, a worker there said the company had 22 employees in Florence. By appearing to be a foreign company, the Arkansas-based Wal-Mart tries to shelter its profits from taxation. La Dolce Vita—Walton style.

The Illinois Department of Revenue Whacked Wal-Mart for $26.4 million in back taxes, and Wal-Mart then sued the state to whack it back. The Illinois director of the Department of Revenue called this loophole “highly questionable conduct.” But Wal-Mart’s response to The Boston Globe story about its last minute loophole was: “Anytime there’s a lawful way to reduce our expenses and save money for our customers, we’re aware of it.” And anytime Wal-Mart can stiff the taxpayers of Massachusetts, they’re on it quicker than you can say “Tuscan Sun.”

The above article is from the Hiffington Post,and the preceding article is from WakeUp WalMart.

big whooppee who cares about this garbage?why is it so newsworthy when walmart is accused of it,but is not newsworthy at all to you walmart haters when your favorite other stores and retailers do the same thing?

big whooppee who cares about this garbage?~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I keep asking myself the same things about your garbage, no doubt as do others.

“The 2,300 word amendment allows a corporation to avoid taxes if they maintain a major portion of their business overseas. “_________So,this means that WalMart would be working against itself if it encouraged Americans to be patriotic,to want to BUY AMERICAN? Hmm-now this DOES open a whole carton,not just can ,of worms. I suppose that may be why they aren’t so hot on hiring back military vets?