Friday, October 26, 2007

Another Deviant Tactic from MallWart


Does your state know about Wal-Mart's scheme? Send a note.Dear Friend,

When people like us cheat on our taxes, it's a crime. For Wal-Mart, it's business.

Earlier this week, Jesse Drucker from the Wall Street Journal wrote an article entitled "Inside Wal-Mart's Bid to Slash State Taxes." It lays out a complicated strategy devised by Wal-Mart's accountants, lawyers and investment bankers to exploit loopholes, bend legal limits and cheat state governments out of hundreds of millions of tax dollars.

Does your state know about Wal-Mart's scheme? Send a note to your state legislators to find out:

http://action.walmartwatch.com/taxevasion

Right now in North Carolina, the state's attorney general is challenging Wal-Mart's lawsuit for a $30 million tax refund. Wal-Mart alleges that it qualifies for a tax deduction by setting up a real estate investment trust - essentially allowing Wal-Mart to pay rent to itself.

Ernst & Young called Wal-Mart's plan "a very aggressive strategy with considerable risk."

And North Carolina isn't the only state where Wal-Mart is using REITs. The state of Wisconsin believes Wal-Mart owes over $17 million in back taxes because of the strategy.

But the Wall Street Journal goes even further:

Wal-Mart decided to hire Ernst & Young to help devise complex tax strategies to use in at least four big states. The accounting firm, for example, helped Wal-Mart take tax deductions in California for dividends it never actually paid. And in Texas, Ernst & Young advised, the giant retailer could exploit a wrinkle in the tax law involving limited partners from out-of-state -- a maneuver subsequently shut down by the state's legislature.

Wal-Mart's 2001 letter to accounting firms got right to the point. It began: "Wal-Mart is requesting your proposal(s) for professional tax advice and related implementation services in connection with minimization of state income taxes in the following states: Arizona, California, Florida, Illinois, Indiana, Michigan, Minnesota, and Pennsylvania."

Its various state tax-cutting strategies seem to have had an impact. On average, Wal-Mart has paid taxes at a rate equal to about half of the average statutory state rate over the past decade, according to an analysis of the company's regulatory filings by Standard & Poor's Compustat.

Why is this so important? Because if Wal-Mart doesn't pay its own taxes, you get stuck footing its bills.

When a Wal-Mart employee ends up in the Emergency Room because he or she can't afford health insurance, the state ends up paying the cost. That means that if Wal-Mart isn't paying its fair share of taxes, you're the one paying for its employees' medical bills.

We can't let Wal-Mart get away with this. Write a note to your state legislators, and make sure they know what Wal-Mart is up to:

http://action.walmartwatch.com/taxevasion

Wal-Mart's prices may be cheap, but Wal-Mart is stealing from your state's taxrolls to offer them.

Thank you for your help to make Wal-Mart pay its fair share.

Sincerely,

David Nassar
Wal-Mart Watch

Paid for by WalmartWatch.com, a campaign of Five Stones and The Center for Community and Corporate Ethics

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