Why Walmart Is the Biggest Welfare Recipient Of All...

November 27th 2014

Alex Mierjeski

Here’s something to chew over as you wake from your tryptophan-induced slumber on Friday morning and blearily stumble out of the door, deciding where best to claim your Black Friday savings: Walmart, the nation’s largest retailer and popular Black Friday destination, currently dodges about $1 billion in federal taxes annually, and is scheming to save billions more. 

A new report adds yet another damning credential to the company’s already lengthy resume of poor business practices, challenging the big box giant’s near monopoly on affordable convenience.

According to the report released by Americans for Tax Fairness, Walmart uses loopholes to dodge taxes, stash profits overseas, and is also lobbying aggressively to lower the U.S. corporate tax rate from 35% to 25%, a move that if completed, is projected to save them on average $720 million a year.

Among the key findings reported in the study, titled “How Walmart is Dodging Billions in Taxes: And Scheming to Avoid Billions More,” the company currently holds $21.4 billion in profits offshore, where earnings aren’t subject to federal tax until returned to the U.S.—something Walmart may very well never intend to do. And although its offshore profits more than doubled in recent years, Walmart’s international capital spending has flat lined, suggesting that untaxed cash is simply piling up, not being funneled back into offshore investments. 

Stateside, while the company stores a large chunk of its profits in un- or lower-taxed zones, it employs 74 lobbyists on Capitol Hill to push issues like reducing corporate tax rates and eliminating taxation on foreign profits—hoping to create a “territorial” tax system that exempts foreign profits from taxation, and that would provide corporations incentive to create an estimated 800,000 offshore jobs. According to the report, the company also gives disproportionately to members of Congressional tax-writing committees, spending $6.1 million since 2009. Taxes are a top lobbying concern for Walmart, which reportedly spent $32.6 million on such efforts over the last five years. 

Walmart’s shady—but legal—actions have a tangible impact on American taxpayers, too. The company’s history of mistreating its employees with low wages is long and ever-present, and the report notes that taxpayers already spend an estimated $6.2 billion every year subsidizing these poorly paid and under-benefited workers. Sadly, that number has nowhere to go but up if Walmart succeeds in stockpiling more untaxed money abroad and lobbying to cut down on already low corporate taxation at home.

walmart subsidies
Walmart and the growing body of pernicious evidence against it is propped up to become, if it hasn’t already, an example of what exactly is wrong with the convoluted state of corporate tax codes and the turn-a-blind-eye precedent set by lawmakers when corporations are blatantly so out of step. The report highlights and frames a glaring problem case that is perhaps more indicative of a systemic challenge than we’d like to think: what Walmart does is perfectly legal and well-documented—major U.S.-based companies like Apple, Microsoft, and IBM added $206 billion to offshore stockpiles last year. These legal, morally bankrupt corporate patterns of skipping out in lieu of, say, raising wages, or providing realistic benefits for employees is endemic, and it is something Americans need to be made aware of. The values might indeed be unbeatable, but the cost of savings is skyrocketing.