Loophole Let Wal-Mart Evade $2.3B in Taxes*

[Omaha Steve]

Source: The New Standard

Loophole Let Wal-Mart Evade $2.3B in Taxes*
by Michelle Chen

*A correction was appended to this news report after initial publication.

Apr. 18 – Accusing a retail giant of wriggling out of over $2 billion in taxes, a watchdog group is pointing to a loophole in certain states that lets huge companies pay rent to themselves.

According to a new analysis of corporate and state financial data, from fiscal years 1999 to 2005, Wal-Mart paid some $2.4 billion in state income taxes, out of $77.4 billion in overall profits. But watchdog groups estimate the company would have owed about $2.3 billion more under state tax rates – calculated at about 6 percent of profits nationwide – suggesting Wal-Mart somehow shrugged off about half of its tax burden.

The report, released by the taxpayer-advocacy group Citizens for Tax Justice (CTJ) and the labor coalition Change to Win, attributes part of the tax gap to real-estate investment trusts (REIT). These trusts enable Wal-Mart and other multi-state companies to funnel money into a fund designated for property investments.

The REIT system has enabled Wal-Mart to effectively double as both landlord and tenant, recycling real-estate funds to itself and then deducting that cost from its tax bill. Court documents recently published by the Wall Street Journal show that Wal-Mart has used the REIT structure to set up the Delaware-based Wal-Mart Real Estate Business Trust, which is run by Wal-Mart employees.

Read more: http://newstandardnews.net/content/index.cfm/items/4700#corrections4700

[Egalitariat]

1. That's pretty smart. As long as you've got $75K/yr politicians

writing tax laws and $1 million/yr attorneys finding ways to beat them, the attorneys will always win.

[ryanmuegge]

2. There's a good article in Harper's this sort of thing.

[Omaha Steve]

3. Wal-Mart just took the top stop in the fortune 500

See my post in GD: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x694720

[unlawflcombatnt]

4. Amazing

Thanks for posting this. The fact that Wal-Mart can use a real estate investment trust deduction to cut its taxes in half is unbelievable.

Wal-Mart is the most disgusting example of how the alleged "free" market and tax policy can be abused by the rich to get even richer. And at the taxpayer's expense.

unlawflcombatnt

Economic Populist Forum

[Shallah Kali]

5. WakeUpWalMart e-action to close tax loopholes exploited by walmart

http://www.wakeupwalmart.com/feature/taxloophole

[Canuckistanian]

6. Nuh-uh, they pay full price for the damage they're doing

Somebody close that loophole - and fast.

[Up2Late]

7. Here are the corrections

CORRECTIONS

Major Change:
A poorly written headline originally misstated the amount that Wal-Mart would have owed as "Taxes on $2.3B" rather than "$2.3B in Taxes." The amount in the article itself has remained correct.

| Change Posted April 18 at 18:20 PM EST

Minor Change:
The original version of this article misstated Wal-Mart's tax payments in Wisconsin as "about a third of one percent of Wal-Mart’s revenues in the state." In fact, the payments amounted to about a third of one percent of Wal-Mart’s profits, or taxable revenues, in the state.

| Change Posted April 18 at 23:14 PM EST

[nealmhughes]

8. I hope everyone sends kudos to Michelle Chen for her hard work.

Her copy alone, on a shoe string non-profit budget should put the MSM to shame. She has turned out more stories thru TNS in a year than the NYT could do with its thousands of employees.

p.s. I tout her and The NewStandard every chance I get, and I've never even met her, but she is prompt to reply to email.

[HuffleClaw]

9. meep

wow, that is a BIIIIG 'loophole'.

[lonestarnot]

10. The Walmart tax is not to be confused with the Walmart tax evasion.

[judaspriestess]

11. If all American citizens

incorporated themselves, then they would get huge tax breaks like the big companies. That is why they are Corporations and we have the same opportunity.

[LeftHander]

12. One year I made over $160,000 revenue

I paid $48,000 dollars in taxes...no loopholes for me. 30%

WalMart took in 77 billion revenue and paid 2 billion in taxes....

That's 2%.....

Isn't it about time we see corporations pay their fair share?

[gravity]

15. You're numbers are wrong

Walmart took in $350 Billion dollars of profit, $77 Billion in gross profits, but their net profit after expenses and taxes was *only* $11 billion, which is the amount of money they really made during the year.

The $2 billion dollars was only in state taxes, and they paid a larger percentage in federal taxes.

[Igel]

13. I'd have called it tax avoidance.

But that's just me.

[THUNDER HANDS]

14. ah Delaware

it's like Disneyland for tax cheats.