Tuesday, May 01, 2007

Wal-mart: The Low Tax Leader, Always

Wal-mart: The Low Tax Leader, Always
The Capital Times :: BUSINESS :: A10
Tuesday, April 24, 2007
Mike Ivey

The next time you make the not-so-scenic drive on U.S. 151 past the giant new Wal-Mart warehouse near Beaver Dam, keep this in mind: Wisconsin's largest employer draws more in corporate welfare than it pays in state taxes.

Not that this comes as any great surprise. Stories about the evil doings of the nation's largest corporations are greeted largely with yawns these days.

But according to a report from the Milwaukee-based Institute for Wisconsin's Future that somehow fell through the cracks on Tax Day, Wal-Mart has used a variety of completely legal tax avoidance schemes to cut millions from its state tax bill.

Using public records, the group determined that Wal-Mart pocketed $852 million in net profits in Wisconsin off value-hungry consumers between 2000 and 2003.

Over that same period, Wal-Mart paid only $3 million in corporate income tax here. That's a tax rate of 0.35 percent, a fraction of the 7.9 percent rate corporations doing business in our fair state are supposed to pay.

Pardon my West High math, but if Wal-Mart paid the going tax rate here it would have owed closer to $67 million.

At the same time, Wal-Mart has been feeding at the public trough like nobody else in state history. The Arkansas-based retailer has benefited from more than $20 million in public economic benefits in Wisconsin, according to one national study. Good Jobs First reported in 2004 that Wal-Mart stores and distribution centers in Baraboo, Beaver Dam, Menomonie, Milwaukee and Tomah received at least $21.75 million in local tax subsidies.

The most egregious example, of course, is the Beaver Dam distribution center with a total subsidy of nearly $8 million. Of that, $4.2 million came via the Beaver Dam Area Development Corp., which negotiated with Wal-Mart behind closed doors.

The shady dealings led to three separate lawsuits, including one filed in 2004 by then state Attorney General Peg Lautenschlager. The AG accused the Beaver Dam Development Corp. of breaking the state's open meeting and public record laws.

A Marquette County judge did rule in favor of the corporation but the case has moved on through the appeals process and the plaintiffs hope the state Supreme Court will eventually rule on the matter.

One could argue that Wal-Mart is only doing its best to bring value to financially-strapped consumers. If the firm paid more in taxes, it would just raise the price on diapers and salty snacks, right?

But what's really galling is that Wal-Mart and its sister retailer Sam's Club are the first to wave the flag and talk about the American dream of owning your own business. Sam's Club even has the nerve to boast it's "in business for small business."

This from a corporation that uses every trick in the book to avoid paying its fair share.

Here's the latest Wal-Mart tax avoidance scheme, as reported in the Wall Street Journal in February 2007.

Apparently, Wal-Mart has aggressively used a "captive Real Estate Investment Trust" or REIT, which is based in Delaware. It owns the company real estate so it can, in effect, rent space back to itself to save on taxes.

A scheme like this would land a hard-working Wal-Mart shopper from McFarland or Sun Prairie some jail time for tax evasion. But for many corporations, working overtime to avoid taxes is just another day at the office.

E-mail: mivey@madison.com

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