Wal-Mart’s Tax Avoidance Schemes

Wal-Mart’s Tax Avoidance Schemes
Corporate tax loopholes are having a profound effect on state revenue collections, and mounting evidence demonstrates that for many years Wal-Mart has aggressively pursued them in order to avoid paying state taxes. The legality of certain tax schemes differs state to state and certain strategies are extremely complex, but the underlying results are the same: they have saved Wal-Mart from paying hundreds of millions of dollars in state taxes. According to a February Wall Street Journal1 article and Standard & Poor’s Compustat system
(which collects data from SEC filings), on average Wal-Mart has paid only about half of the statutory state tax rates for the past decade.
This paper will focus on two primary strategies utilized by Wal-Mart – trademark holding companies and “captive REITs” – and demonstrate how states have
responded to them. It will also delve briefly into two emerging issues, Wal-Mart’s use of state and local government subsidies, and its aggressive challenging of
property tax assessments. Why are these issues so important? As companies like Wal-Mart find more and more creative ways to avoid paying their share of
taxes, the burden on individual taxpayers will continue to grow.

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