Walmart avoids paying on average $1 billion a year in federal taxes through aggressively exploiting tax loopholes – and it has an army of lobbyists working on cutting its tax bill by at least another $720 million, according to a report released today by Americans for Tax Fairness.
The report notes that Walmart pays an effective tax rate of 29 percent on the profits from its domestic retail operations, significantly below the statutory corporate tax rate of 35 percent. Further, Walmart has $21.4 billion in profits parked offshore on which it is paying no U.S. taxes at all.
Walmart cuts its tax bill through using a variety of means, the report said, including a provision in the tax code that allows for “accelerated depreciation” of capital expenses. That was a provision Congress added to the tax code after the 2008 recession to encourage business spending, and was intended to be temporary as long as the economy was in recession. But business lobbyists, including those employed by Walmart, are trying to get accelerated depreciation made permanent as part of a package of “tax extenders” now awaiting action in the lame-duck session of Congress.
Accelerated depreciation allows corporations to write off the value of their investments much faster than the useful life of the investment. It is, in effect, a tax subsidy for business purchases, and Walmart could use the write-off for anything from delivery trucks to corporate planes.
The report notes that Walmart has employed 74 lobbyists to advance its tax-cutting agenda. Twenty-six of those lobbyists are working on the tax-extenders issue alone. Walmart’s lobbyists are also leading the effort to get the top corporate tax rate lowered from 35 percent to 25 percent, which would shave an additional estimated $720 million off its tax bill annually. Another top priority is pushing a shift to a territorial tax system. Instead of paying taxes on the profits it earns overseas, minus the taxes it pays to the countries where those profits are earned, Walmart under a territorial system would owe no U.S. taxes at all on profits earned outside of the U.S. That would give Walmart an incentive to shift as much of its operations outside of the U.S. as possible – a tactic already used by many non-bricks-and-mortar-retail multinational corporations, which funnel profits generated through intellectual property or capital flows through overseas entities.
“American consumers flock to Walmart because of its low prices – what they don’t know is that this comes at a high cost,” the report says. The $1 billion that Walmart avoids paying in taxes means $1 billion for national needs that is on the backs of working Americans instead – including Walmart’s financially strapped customers. And that is on top of the estimated $6 billion that taxpayers spend each year on public assistance to Walmart employees because of their rock-bottom wages and nearly absent benefits.
It’s one more way Walmart’s much-ballyhooed low prices are not a bargain. Those prices mean lost American jobs, poverty wages for many of the jobs that remain, and a massive shift of the federal tax burden down to Walmart’s base of consumers. It we really wanted to take up Walmart’s admonition to “live better,” we’d end Walmart’s tax evasion games and make all corporations pay their fair share.