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The U.S. tax code and corporate America are infamously known as a duo surrounded by political rhetoric and controversy. Many people argue that the country’s most well-known corporations receive far too many benefits from Uncle Sam and fail to pay living wages to employees. Others remind critics that these corporations create millions of jobs for the economy. With a new report focusing on the world’s largest retailer, the debate is not likely to end anytime soon.
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Wal-Mart (NYSE:WMT) and the Walton family are the beneficiaries of tax breaks and subsidies estimated at more than $7.8 billion per year, according to Americans for Tax Fairness, a coalition of 400 organizations that strive for tax reform. Wal-Mart receives an estimated $6.2 billion annually from federal taxpayer subsidies, such as Section 8 Housing Program, Supplemental Nutrition Assistance Program, and Medicaid. Another $1 billion is the result of Wal-Mart using tax breaks and loopholes to write off capital investments. The Waltons, America’s wealthiest family, also avoid an estimated $607 million in federal taxes each year through lower tax rates on capital gains.
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“In addition to the $7.8 billion in annual subsidies and tax breaks, the Walton family is avoiding an estimated $3 billion in taxes by using specialized trusts to dodge estate taxes – and this number could increase by tens of billions of dollars,” said the report. “Wal-Mart also benefits significantly from taxpayer-funded public assistance programs that pump up the retailer’s sales. For example, Wal-Mart had an estimated $13.5 billion in food stamp sales last year.” Wal-Mart captured approximately 18 percent of the food-stamp market in 2013.
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These figures certainly suggest that Wal-Mart is the Welfare Queen of Corporate America, but the other side of the aisle should not be ignored. The report fails to acknowledge that if Wal-Mart did not exist and provide jobs to its 1.4 million employees, the demand for taxpayer assistance would be even greater. Furthermore, it could be argued that subsidies included in the $6.2 billion figure add to Wal-Mart’s wage expenses since they have to pay employees enough money to make obtaining a job worthwhile, as opposed to staying home and collecting welfare checks.
It’s also important to remember that Wal-Mart and other corporations are not alone in this debate. They are allowed to take advantage of loopholes with the help of Congress, albeit one that is available to the highest bidder. Over the past six years, the Center for Responsive Politics reports that Wal-Mart spent between $6 and $8 million on lobbying each year. Citizens for Taxpayers released a report earlier this year that described the situation quite well.