Home > Uncategorized > The “Walmart Tax” Results in Higher Profits for Shareholders, Higher Taxes for Everyone Else

The “Walmart Tax” Results in Higher Profits for Shareholders, Higher Taxes for Everyone Else

The Naked Capitalism blog earlier this week featured a USA Today op ed column written last month by Lonnie Sheppard, president of UFCW Local 1529 in Memphis TN titled “Walmart Tax Every American Pays”. The article describes how the combination of Walmart’s low compensation and state and local tax breaks results in a “Walmart Tax” for citizens in every state or municipality where a Walmart is located. Shepard writes:

What is the Walmart Tax?

According to a 2014 report by Americans for Tax Fairness, Walmart receives an estimated $6.2 billion in subsidies every year, primarily from the Federal Government.

The reason? The world’s largest retailer, infamous for its poor working conditions and unfair treatment of employees, pays its workers so little that thousands of Walmart employees are forced to rely on public assistance programs like food stamps, Medicaid and subsidized housing. Programs funded by American taxpayers.

No matter the town or city, if you have a Walmart in your community, you are paying a Walmart Tax. In fact, a single Walmart Supercenter is estimated to cost taxpayers between $904,542 and $1.74 million per year in public assistance money.

For Walmart, this represents tens of millions of dollars in savings, all on the backs of America’s taxpayers and workers.

And Mr. Sheppard notes that the “Walmart Tax” isn’t the result of only increased payments for employee’s subsidies. It is also the result of tax breaks communities offer Walmart, presumably in exchange for the jobs they bring. He uses the example of a Walmart in his home state of Tennessee to make this point:

In Tennessee, Walmart’s failure to do what is right costs taxpayers an estimated $169.8 million annually for its employees’ public assistance (as of 2014). In August 2014, a new Walmart opened up at the University Commons development in Knoxville, Tennessee. That development received a 25-year, $10 million tax increment financing incentive, as well as a $1.5 million grant from the city. Given the difficult fiscal choices our state faces, it is outrageous that a company this wealthy would ask Tennessee taxpayers to subsidize its operations.

So a state like Tennessee will tell the public schools they do not have sufficient resources to help children raised in poverty while they effectively subsidize the shareholders of Walmart. This wouldn’t be a problem if it was limited to one state… but the reality is that The Walmart Tax could apply to any corporation or business entity that suppresses wages and seeks tax breaks in exchange to locating or remaining in a community. It would be helpful if more political leaders called on corporations to be good citizens and made the well-being of their communities and employees a priority instead of the bottom line.

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