This Black Friday, legions of shoppers will throng to their local Walmart in frenzied pursuit of holiday deals. But it turns out that Walmart has saved the sweetest deals for itself.
In a recent analysis of Walmart’s tax spending, Americans for Tax Fairness (ATF) found that the company “avoids $1 billion a year in taxes” through federal loopholes, and various political shenanigans drive this always-low tax rate: the big-box giant is absorbing government subsidies both directly and indirectly, through its retail operations as well as its ingenious accounting methods. Overall, the retail giant can evade taxes through overseas accounts, on one hand, and raid the public trust on the other by capitalizing on the benefits system.
The losers in Walmart’s tax scheme are the working-class consumers who think they’re getting a good deal by elbowing through the mob surrounding the Xbox floor display. They’re being secretly robbed as the country’s pre-eminent retailer shields hundreds of millions of dollars of revenue from the tax system through creative, perfectly legal strategies to reduce its liability.
One major way Walmart and other multinationals skirt tax obligations, ATF explains, is to funnel the money to an overseas location where it can be subject to “a gaping loophole known as ‘deferral.’ ” The ability to park assets in other countries “gives corporations great incentive to earn profits offshore (or make it look like they are earned offshore)—often by moving jobs overseas.”
ATF estimates that through its globalized business structure, “Walmart is avoiding paying U.S. taxes on $21.4 billion in offshore profits.” And its reach overseas is expanding, with investment in new operations in Africa, Asia and Latin America.
While Walmart’s tax avoidance drains the government’s revenue streams, an even more convenient source of “savings” for Walmart operates on the retail level, through the pockets of consumers and workers who rely on taxpayer-funded federal welfare programs. Many of the associates, warehouse laborers and other low-wage workers in Walmart’s massive production chain depend on federal programs like Medicaid and food stamp subsidies to make ends meet. According to a 2013 congressional research report, “a single 300-employee Walmart Supercenter may cost taxpayers anywhere from $904,542 to nearly $1.75 million per year.”