Florida Dems Look To Close Wal-Mart Loophole

Well, it isn’t REALLY a Wal-Mart loophole, it just so happens that Wal-Mart is the reason the use of the REIT loophole has gained national attention.

In case you been living under a rock for the last year or so, you’re aware that in North Carolina and across the country Wal-Mart has saved millions of dollars in state tax bills over the past few years by essentially paying rent to itself and writing it off as a tax deduction, trudging back to Bentonville with big old gobs of money that should have gone to funding state programs. North Carolina got wise to the scheme and assessed Wal-Mart for back taxes; Wal-Mart responded by saying “Oh NO you didn’t;” North Carolina said “Oh YES we did,” and the rest is legal history unfolding before our very eyes.

Well, aside from those states that have decided to seek back taxes from companies for use of the REIT loophole, there are also those which have wisely sought ways to close the loophole up, either through attacking it directly or by adopting combined reporting. Florida Democrats, while not completely optimistic about their chances, are hoping to join the list of proactive states:

The Democrats wish list includes closing a legal loophole that Geller said allows corporations to avoid $100 million a year in real estate transfer taxes. House Democratic Leader Dan Gelber of Miami Beach is proposing closing another loophole that he says allows corporate giants like Wal-Mart and Microsoft to avoid $400 million a year in Florida corporate profit taxes.

Unfortunately, a Republican-controlled House that had vowed to hold the line on tax issues isn’t exactly offering hope to those who would like to see the loophole closed.

Crist gives State of State address [Florida Today]

TALLAHASSEE—Citing the gloom and doom of a stagnant economy and budget cuts, Democratic leaders renewed their call Tuesday for closing tax loopholes and finding new sources of revenues to protect government services.

“We’re not cutting fat, we’re way past that,” said Senate Democratic Leader Steven Geller of Cooper City. “We’re now breaking the bones and trying to eat the marrow.”

Speaking to reporters less than a few hours before the opening of the 2008 legislative session, Democrats acknowledged that many of their ideas will likely die in the Republican controlled House, where Speaker Marco Rubio of West Miami has vowed to hold the line on new taxes.

The Democrats wish list includes closing a legal loophole that Geller said allows corporations to avoid $100 million a year in real estate transfer taxes. House Democratic Leader Dan Gelber of Miami Beach is proposing closing another loophole that he says allows corporate giants like Wal-Mart and Microsoft to avoid $400 million a year in Florida corporate profit taxes.

“The (budget cutting) challenges shouldn’t be an opportunity to hurt people,” Gelber said.

Other Democratic ideas include using state pension fund investments to attract high-tech businesses.

“You need to examine both sides of the ledger,” Geller said. “Income and outgo.”

-- Jim Ash

Posted by Corey Himrod on Wednesday, March 05, 2008

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