Lie #11: Wal-Mart Pays Its Fair Share of Taxes

“All taxpayers should have the right to rely on clearly defined tax laws that are reasonably and fairly enforced.'' – John Smiley, Wal-Mart Spokesman [Wall Street Journal, 1/6/2008]

“Each Wal-Mart store should reflect the values of its customers and support the vision they hold for their community.” – Sam Walton [www.walmartstores.com]

The Truth:

Wal-Mart tries to avoid paying over $33 million in North Carolina taxes.  Using real estate investment trusts (REITs), Wal-Mart sought to avoid taxes in North Carolina by paying rent to itself. Wal-Mart devised a complex restructuring and tax avoidance scheme specifically for North Carolina because, like other non-combined reporting states, a corporation can report certain subsidiaries separately. However, a North Carolina court ruled that Wal-Mart’s tax restructuring efforts had “no real economic substance.” As a result of this ruling, the state did not have to refund $33.5 million in back taxes to Wal-Mart. [Wall Street Journal, 1/6/2008]

Wal-Mart evades $17 million in Wisconsin. As in North Carolina, Wal-Mart’s use of REITs was also damaging to Wisconsin taxpayers. State tax auditors established that Wal-Mart avoided $17.7 million in taxes from1998-2000. However, Wal-Mart might not be out of the woods yet. The giant retailer may owe additional back taxes.  [Milwaukee Journal Sentinel, 8/25/07]

Wal-Mart uses an Italian subsidiary to circumvent taxes in Illinois.  The Illinois Department of Revenue is demanding $26.4 million in taxes from Wal-Mart for using an Italian subsidiary as a tax shelter. Using a tax avoidance scheme similar to its use of REITs in other states, Wal-Mart set up a subsidiary in Italy in order to avoid state taxation in Illinois. Nearly every Wal-Mart store in the United States is owned by this Italian subsidiary; therefore, the tax avoidance may not be limited to Illinois exclusively.  [Wall Street Journal, 11/17/07]

Wal-Mart uses public dollars to subsidize growth. In order to fund its massive growth, Wal-Mart relies on over $1.2 billion dollars in “tax breaks, free land, infrastructure assistance, low-cost financing and outright grants from state and local governments.” For example, local officials in Pottsville, Pennsylvania gave Wal-Mart $2.45 million to subsidize a distribution center. Not only does Wal-Mart receive money for distribution centers, it also gets money for supercenter growth. In fact, Wal-Mart obtained $12 million in sales tax rebates to open a store in Orland Hills, Illinois. [CNNmoney.com, 11/18/2005, ]http://www.walmartsubsidywatch.com]

Wal-Mart challenges property tax assessments.  With over $11 billion in profits last year, Wal-Mart still finds the time to challenge local communities over the property tax assessments. Wal-Mart often challenges and appeals local property taxes in multiple years, resulting in over 2100 cases nationally.  In many cases, the valuations and appeals reveal a significant loss for the communities in terms of revenue. When Wal-Mart asks for change in the assessed value of properties, it is often to push for large devaluations in the property values and it decreases the amount of revenue for a town or city.  In 2003, Wal-Mart was successful in lowering the property tax assessment of a supercenter in Aurora, Colorado from $22 million to $9.6 million; resulting in a loss of $456,000 for the Denver suburb.  [Rolling Back Property Tax Payments, Good Jobs First, October 2007, ]http://www.walmartsubsidywatch.com]