Source: National Memo
Author: David Cay Johnston
Next time you drive past a Walmart, think about how much in taxes you pay to subsidize the nation’s largest private employer, owned by the nation’s richest family.
Your cost this year: $247 if you are single, $494 if you are a couple, and $987 if you are a couple with two kids.
And you pay whether or not you shop at Walmart or its Sam’s Clubs.
Put another way, if you are single and a minimum-wage earner, the first 39 minutes you are on the job each week just goes to provide welfare for Walmart and the Waltons.
For a family of four, the cost of welfare for Walmart and the Waltons probably comes to more than your weekly take-home pay, based on government data on incomes.
American taxpayer money explains almost a third of Walmart’s worldwide pretax profits last year. But that understates the scale of taxpayer assistance to the retailer, which made 29 percent of its sales overseas last year.
Figure about 44 percent of Walmart’s domestic pretax profits were contributed by local, state and federal taxpayers directly and indirectly, based on company disclosure statements.
These figures on welfare for Walmart and the Waltons were calculated from a report released today by Americans for Tax Fairness, part of a broad coalition of union, civil rights and other organizations trying to shame the Walton family into paying wages that if not good, are at least enough to make sure Walmart employees do not qualify for food stamps.
So far the Waltons have shown themselves to be shameless and utterly unapologetic for foisting any of their costs onto taxpayers instead of earning their way in the marketplace.
This is in a way not surprising. The best-known heir of the retailing innovator Sam Walton, his daughter Alice, 64, has a long history of drunk-driving accidents, including killing a woman hit by her vehicle.
While repeat drunk drivers are routinely prosecuted in most jurisdictions, often as a matter of policy, and upon conviction get the time behind bars their conduct deserves, to date no law enforcement agency has seen fit to prosecute Alice Walton. Instead she basks in the glow of encomiums for the philanthropy enabled by the fortune her father built and boosted by the steady flow of money taxpayers are forced to give her, her relatives and other Walmart investors.
Compared to this taxpayer largesse, Walton philanthropy is small change.
The Walton Family Foundation ranks 22nd in America with $2.2 billion in assets, which may seem large. But Walmart and the Waltons have already extracted that much from the taxpayers this year. In fact they hit about $2.2 billion of taxpayer subsidies on Saturday, April 12, based on the Americans for Tax Fairness report.
The $7.8 billion a year annual cost estimate in the new report is based on a study last year by the House Education and the Workforce Committee Democratic staff. It showed that each Walmart in Wisconsin costs taxpayers between $905,000 and $1.75 million in welfare costs.
Americans for Tax Fairness extrapolated to all the Walmarts in America based on that study and then took into account other costs taxpayers are forced to bear to subsidize the company and, thus, its controlling owners, the Waltons.
The study estimates that if the subsidy costs were divided equally among the company’s 1.4 million American workers, the cost would be $4,415 per Walmart employee.
Welfare for Walmart workers, the Americans for Tax Fairness report says, costs $6.2 billion, making it by far the bulk of the costs taxpayers must bear.
The study estimates that only $70 million is for the use of tax dollars to build Walmart stores, distribution centers and other property provided by the largesse of the taxpayers. That number is small because Walmart has pretty much built out across America.
To date Walmart has probably received $1.5 billion from taxpayers to build and equip stores, distribution centers and other buildings, according to Phil Mattera, research director at Good Jobs First, which on a budget of about $1 million annually has for years dragged out of local, state and federal officials details of how much welfare Walmart gets.
The discounted rates at which dividends are taxed, a policy first put forth by then-President George W. Bush in 2003, save the Walton heirs $607 million in taxes annually, the Americans for Tax Fairness report calculated from company disclosure reports.
One aspect of the report should be regarded with caution.
Americans for Tax Fairness says Walmart saves $1 billion each year by taking advantage of an almost universally used method to deduct the value of new equipment quickly rather than slowly. It is called accelerated depreciation.
That lowers taxes in the early years after an investment is made, but it means higher taxes in later years. The proper way to measure this is how much less the future taxes are worth because they are delayed between one and 20-plus years. A more realistic figure is probably $100 million, a tenth of what the report says.
Despite this, I used the report’s estimate of accelerated depreciation costing $1 billion annually in calculating how much it costs you to subsidize Walmart and the Waltons.
That caveat presented, the core issue here is why does Walmart need welfare? Indeed, why has welfare become almost universal among large American companies, some of which derive all of their profits from stealth subsidies?
Walmart is far from alone among big corporations that do not depend on what they can earn in the marketplace, but instead extract your tax dollars to juice their profits.
Every big company I know of (except one) not only takes from the taxpayers, but has its hands out for all the welfare it can collect in the form of tax dollars paying for new buildings, exemptions from taxes, discounted electricity, free job training and all sorts of regulatory rules that thwart competition and artificially inflate prices. From Alcoa and Boeing on through the alphabet, America’s big companies – and a lot of foreign-owned companies – are on the dole.
The one exception is Gander Mountain, a chain of retail stores that sells sporting goods, especially for hunting and fishing. It refuses all welfare and once sent a check for $1 million to a municipal agency after being alerted to a hidden subsidy.
Imagine how much more money you would have in your pocket if the Waltons stood on their own proverbial two feet, pulled themselves up by their own bootstraps, and gave back all the welfare they have taken year after year after year.
Then ask yourself why you voted for any politician in either party who has not introduced legislation and regulations to stop this and recover that money – with interest.