DC-based non-profit research center Good Jobs First found out just how detrimental Walmart can be for local economies. The group’s study “Shifting the Burden for Vital Public Services: Walmart’s Tax Avoidance Schemes” was released last month, highlighting the schemes of the infamous big-box bully that amount to avoidance of more than $400 million in local and state taxes each year.
According to the report, “for every kind of tax that a retail company would normally pay or remit to support public services, Walmart has engineered an aggressive scheme to pay less and keep more.” Although its actions are legal, the resulting loss in revenue “may be more of a fiscal burden than a benefit to many of the communities in which it operates”:
It has extracted more than $1.2 billion in property tax abatements, sales tax rebates, infrastructure and site improvements, and other economic development subsidies from state and local governments around the country. In recent years the subsidies amounted to roughly $70 million annually.
Using gimmicks such as deducting rent payments made to itself (through a captive real estate investment trust), it avoids an estimated $300 million a year in state corporate income tax payments.
Using an army of lawyers and consultants, it systematically challenges property tax assessments to chip away at its property tax bills, costing local governments several million dollars a year in lost revenues and legal expenses.
And it takes advantage – to the tune of about $60 million a year – of those states that fail to cap the “vendor discounts” they provide to large retailers for collecting sales taxes from their customers.
Can DC’s economy take on such a risk that comes in the name of helping us to “live better”?