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Location: Oaksterdam, California

Friday, November 11, 2005

Wal-Mart's Tax on Us

I used to have one of those super stores around the corner from where I live. The service was always terrible. But it was the only place to shop a 2 in the morning which would let you drive the little electric carts around.

Thank god it it's gone and we now have a Home Depot in its place. Still miss the electric carts though.

The store was bad in in so many ways as you can see in this report, Wal-Mart's Tax on Us:
Wal-Mart's reaction to the 2004 survey of its reach into taxpayer subsidies was classic bait and switch. The company responded by saying it couldn't verify the figures, but that if they were correct, then 'it looks like offering tax incentives to Wal-Mart is a jackpot investment for local governments.'

Specifically, the company claimed that over the past 10 years, it collected $52 billion in sales taxes, remitted $192 million in income taxes, wage withholdings and unemployment insurance, and paid $4 billion in local property taxes. 'Do the math and you will see that every dollar invested returned more than thirty,' the company summarized.

Of course Wal-Mart 'collected' sales taxes; as a retailer, it's required by law to do so. But that's consumers' money, not the company's. Wal-Mart is just a pass-through. And since much of its sales come at the expense of other retailers, any gain is obviously offset by lower sales taxes collected at competing stores -- and by the taxpayer costs of abandoned downtowns and malls.

Of course Wal-Mart 'remitted' income and payroll taxes -- it's an employer, and is required to deduct taxes from its workers' paychecks. But income tax is not the company's money; it's money from the workers' meager paychecks. And since Wal-Mart jobs are largely shifted from other retailers and Wal-Mart pays so poorly, any net revenue gain is unclear.

And, of course, Wal-Mart paid some property taxes -- all property owners have to support local services. Unless, of course, they get an abatement; our study found more than 40 such instances. But Wal-Mart offered no disclosure on how much in property taxes it hasn't paid. And as economists point out, companies pass on the cost of property taxes to customers as much as market conditions allow.

So there you have Wal-Mart's version of cost-benefit analysis. Taxpayer costs for economic development are balanced by 'benefits' that mostly consist of, well, workers.

(via Buzzflash)