Corporate Accountability and WorkPlace

Walmart's Bottomless Greed: Dodging Billions in Taxes, Scheming to Avoid Billions More

Rich companies like Walmart want more tax cuts now and in the next Congress.

There’s another reason Walmart is known as one of America’s greediest corporations: it won’t pay its fair share of taxes.

Walmart Stores is America’s top-earning corporation. In 2013, its revenues were $473 billion, yet it only declared $16 billion in profits. While it has been reported that Americans subsidize Walmart because its low-wage employees receive an estimated $6.2 billion annually in Food Stamps, Medicaid and other anti-poverty benefits, what’s not widely known is that Walmart has parked $21.4 billion in untaxed profits offshore and is currently lobbying to cut U.S. corporate tax rates.

“Walmart’s offshore profits have doubled in recent years at the same time that its offshore investments flattened, suggesting that the company is piling up cash overseas to avoid paying U.S. taxes on the earnings,” a new report by Americans for Tax Fairness found. “Walmart is working to reduce corporate tax rates and eliminate all taxation of foreign profits.”

“You’re starting to see Walmart playing games like other companies,” said Frank Clemente, Americans for Tax Fairness executive director and author of How Walmart is Dodging Billions in Taxes and Scheming to Avoid Billions More. “They’re engaging in a tax dodge.”

Walmart employees 74 lobbyists in Washington, has spent $32 million on tax-related lobbying in the past five years and underwrites other tax-cut lobbying by the Capital’s three largest tax-cut groups, AFT found, which are the RATE (Reforming America’s Taxes Equitably) Coalition, Alliance for Competitive Taxation, and the Business Rountable.

“There’s a big campaign going on here in Washington, D.C., to reform the corporate tax system,” Clemente said. “It’s a big lobbying effort being waged by big corporations to try to reduce their income tax rate at the same they’re lobbying for corporate tax loopholes.”

Corporate Lobbyists Smell The Money 

Right now in Washington, both parties are entertaining one of the most dangerous and destructive policy decisions that could affect all Americans for years to come. There is a growing bipartisan consensus that America needs tax reform and that many corporations are paying too much—even as giant multinationals have dodged paying taxes on $2.1 trillion that’s sitting offshore instead of being spent here.

Walmart’s $21.4 billion in untaxed offshore profits is part of that corporate tax-avoidance trend.

“What’s going on on the Hill is really, really insane,” said Stephen Wamhoff, legislative director for Citizens for Tax Justice, speaking of the growing obsession with tax reform. “Members and staffers are saying that they should renegotiate and get the policy right and not talk about revenue numbers.”  

“The whole purpose of taxes is to raise revenue. So how will they decide what that plan is?” he asked, explaining that Republicans want to keep cutting corporate taxes, even if America's biggest business aren't paying an estimated $100 billion a year. Worse, plenty of Democrats are going along with this script, Wamhoff said, instead of demanding a fairer system and more revenue for needed essentials. “It’s crazy,” he remarked.

It’s no surprise that after every federal election, the winners salivate about what they can do to enact their sponsors' agendas. But what’s especially dangerous now is that on the tax front, both parties seem willing to perpetuate the right-wing's “starve the beast” philosophy, which bleeds public programs and keeps giant tax evaders off the hook.   

In coming days, Congress has to decide if it will extend 56 individual and corporate tax breaks that are set to expire this year. If not renewed, they would yield an estimated $609 billion over the next 10 years for the feds, with tens of billions also going to states. The GOP-led House wants these breaks to be permanent. The Democrat-controlled Senate is inclined to go along for now and revisit it next year.

“The reason you do comprehensive, bipartisan tax reform is that’s the place where you put the spotlight on each and every one of these provisions,” Senate Finance Committee Chair Ron Wyden told the New York Times. “You can’t do that in the space of 11 days.”

No matter the explanation, the bottom-line is that tax-avoiding corporations are all but certain to keep evading taxes. And the worst of them will keep doing that by keeping their billions in untaxed earnings overseas, as their lobbyists—like Walmart’s team in Washington—moan that U.S. tax rates are too high.  

“Everyone is saying that the system is broken and needs to be changed, and corporations are trying to ride that wave,” Wamhoff said.

Most Corporations Don’t Even Pay Today’s Tax Rate 

Talking about taxes, like anything involving numbers, can be numbing. And much of corporate America is depending on Americans to glaze over and not take a hard look at what has been going on for years when it comes to corporate America avoiding paying its fair share.  

“Corporations are lobbying Congress to get a better deal on taxes, claiming that they are harmed by the U.S. statutory income tax rate for corporations, which is 35 percent, which they argue is the highest in the world,” Wamhoff said. “But almost no corporation actually pays 35 percent of their profits in U.S. income taxes.”

Wamhoff’s group and other tax analysts looked at the Fortune 500 corporations that were profitable each year from 2008 through 2012 and found that they collectively paid 19.4 percent of U.S. profits in federal income taxes in that time. They found that two-thirds of the multinational corporations studied actually paid lower effective tax rates in the U.S. than they paid in the other countries where they do business. This shows that corporate lobbyists’ claims that U.S. taxes are too high are nonsense.

“One reason American corporations pay so little is that they can use accounting gimmicks to make their profits appear to be earned in offshore tax havens—countries with no corporate income tax (or a very low one) or countries that have other loopholes that allow them to shift profits from one country to another,” he explained. “For example, the profits that American corporations tell the IRS they earn in Bermuda and the Cayman Islands (which both have a zero percent tax rate but very little real investment) equal 16 times the entire GDP of those tiny countries! Clearly these profits are not truly earned in Bermuda or the Cayman Islands.”

Devil In The Details

The latest buzzword in Washington’s corporate circles is “revenue-neutral” tax reform. What that means, Wamhoff said, is allowing these giant companies to keep most of the money they should have been paying to the government for years. It’s as if there can only be “reform” if it benefits big business, not average American taxpayers who have seen government services shrink in many key areas, such as education.

“Even Obama and many Democrats have proposed revenue-neutral reform for the corporate and business part of the tax code,” he said. “Republicans insist that all of tax reform should be revenue-neutral and a close look at their plans reveal that they actually lose significant revenue.”

The reason why this entire discussion is so dangerous is that it sets the stage to do what right-wing extremists like Grover Norquist have wanted to do for years, which is shrink the federal government by starving programs such as Social Security of revenues that would be used to maintain benefits at levels upholding dignified living standards.  

“In 2011, Congress declared a budget emergency and enacted the Budget Control Act, which cuts over $100 billion from federal spending each year,” Wamhoff said, referring to the so-called federal budget sequester.

“When it started to go into effect, over 50,000 Head Start slots were being cut and medical research projects were halted. Lawmakers managed to undo part of these cuts temporarily but they are scheduled to be fully in effect again in 2016,” he said. “The big question is whether the next Congress can say with a straight face that we don’t need more revenue while kids are being kicked out of Head Start because of an alleged budget crisis.”

Needless to say, it would be wrong to call what’s unfolding a budget crisis. It’s a greed-driven revenue crisis, because a great many of America’s biggest and most profitable corporations are tax-dodgers that refuse to pay federal taxes, that have stockpiled billions overseas, that complain U.S. corporate taxes are too high, and won’t invest domestically, whether by paying living wages (like Walmart) or bringing manufacturing back home (like Apple).   

Walmart isn’t even the country’s biggest overseas corporate tax dodger. Americans for Tax Fairness found that distinction belongs to high-tech giants Apple, Microsoft, Oracle, Dell, and the pharmaceutical giants Amgen and Eli Lilly. But as America’s biggest retailer, and a company whose profits depend on delivering goods over public roads and bridges, Clemente said Walmart’s refusal to pay a fair share was notable.

“Everyone [the public in polls] says they want us to invest in rebuilding our infrastructure. They want us to invest in new medical cures. They want us to make our education system better. They want us to make college more affordable for kids. All these things require money,” Clemente said. “And the question is do you want corporations to get bigger tax breaks or do you want to make these investments? That’s what it comes down to.”

Steven Rosenfeld covers national political issues for AlterNet, including America's democracy and voting rights. He is the author of several books on elections and the co-author of Who Controls Our Schools: How Billionaire-Sponsored Privatization Is Destroying Democracy and the Charter School Industry (AlterNet eBook, 2016).

Alyssa Figueroa is an associate editor at AlterNet. 

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