According to Good Jobs First and The Wall Street Journal, a large chunk of sales tax revenue gets redirected to retailers like Wal-Mart, a company that pockets an estimated $70 million a year in sales tax revenues.

At least that is the finding of a report released today by Good Jobs First, a nonprofit research group here in Washington:

Most of us don’t realize that in a majority of states with a sales tax, a portion of the money actually goes into the pocket of the retailer under programs set up by state and local governments. In this first-ever comprehensive national analysis of the subject, Good Jobs First finds that the public sector is losing more than $1 billion a year through these sales-tax diversions. A large share of revenue gets redirected to giant retailers such as Wal-Mart, a company we estimate pockets more than $70 million a year in sales tax revenues.

The state laws discussed in the report allow retailers to keep a portion of sales-tax revenue to offset the cost of collecting the funds in the first place, a reasonable enough excuse (especially since state governments are so flush with cash at the present). But does anyone really, and I mean REALLY, believe that Wal-Mart spends $60 million a year collecting sales tax? In this age of computer everything and electronic money transfers, I have a hard time believing it costs more than a fraction of that.

As it stands, many states have calculated a vendor compensation rate, which can be applied to a percentage of sales tax revenue to determine how much a retailer gets to keep for its trouble. As the WSJ reports, Good Jobs First has identified 13 states that impose no ceiling on the total amount retailers can keep. In states such as Illinois, Texas, Pennsylvania and Colorado that vendor compensation rate can be applied to the full amount of sales tax a company collects, resulting in substantial returns for companies like Wal-Mart. Good Jobs First has estimated the givebacks in these states - Illinois ($126 million), Texas ($90 million), Pennsylvania ($72 million), and Colorado ($69 million). Jesse Drucker at the WSJ kindly puts some perspective on those numbers - for example, the $90 million Texas gives away by not capping vendor compensation would cover the $82 million price-tag needed to fund that state’s primary pre-kindergarten program.

For what its worth, the Illinois Revenue Department was quoted as saying the state has tried to cap the compensation program, but relentless lobbying by the retail industry has so far kept legislators from making changes.

Skimming the Sales Tax: How Wal-Mart and Other Big Retailers (Legally) Keep a Cut of the Taxes We Pay on Everyday Purchases [Good Jobs First, November 2008]

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Allegations of campaign violations are rising in the Big Sky State, and a recently-released decision on a 2006 complaint might lead to changes in Montana’s campaign finance law.

Complaints of violations flowing in at the rate of about 30 per day to the state’s Commissioner or Political Practices, have of which are coming from Ravalli County in southwestern Montana. According to the Ravalli Republic:

The state’s most pressing investigation in Ravalli County concerns the Higher Ground Foundation, a nonprofit group that is urging voters to repeal the county’s growth policy in an effort to prevent zoning and streamside setback regulations from being adopted later.

The group formed as an “incidental committee,” which are defined as a group that makes political contributions but whose primary purpose isn’t to influence elections. But it has become clear to many that Higher Ground has a higher purpose than simply contributing funds, and is instead directly promoting the repeal of the county’s growth policy. Complainants are urging the state to force the group disclose the sources of its funding, and its expenditures.

So how does this tie into Wal-Mart? Well, just over a week ago, Montana Commissioner of Political Practices Dennis Unsworth released his opinion regarding a 2006 complaint against a group called Ravalli County Citizens for Free Enterprise. The group supported construction of a Wal-Mart Supercenter and the successful repeal of a zoning ordinance that blocked big-box stores. Unsworth ruled that RCCFE was nothing more than a Wal-Mart front-group that violated financial reporting and record-keeping laws. He said that Wal-Mart appeared to have bought a campaign in order to influence an election, and that the case could lead to Third party campaigning is growing in the state [The Missoulian]” title="changes in Montana’s campaign finance disclosure laws">changes in Montana’s campaign finance disclosure laws. It turned out that only $90 of the PAC’s money came from local residents, whereas $115,000 came from Wal-Mart.

“It’s absolutely critical,” Unsworth said, “that voters know who’s behind these groups, in order to make informed decisions.”

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