Documentos de Académico
Documentos de Profesional
Documentos de Cultura
ON TAX DAY
How
Taxpayers
Subsidize
Americas
Biggest
Employer
and Richest
Family
April 2014
Americans for
Tax Fairness
Page 1
Americans for Tax Fairness is a diverse coalition of 400 national and state organizations that collectively represent tens of millions of members. The organization
was formed on the belief that the country needs comprehensive, progressive tax
reform that results in greater revenue to meet our growing needs. ATF is playing a
central role in Washington and in the states on federal tax-reform issues.
Americans for Tax Fairness
1726 M Street NW Suite 1100
Washington, D.C. 20036
www.AmericansForTaxFairness.org
Page 3
The Waltons avoid an estimated $607 million in federal taxes on their Walmart
dividends. The reason: income from investments is taxed at a much lower tax rate
than income from salaries and wages.
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.
Walmart also benefits significantly from taxpayer-funded public assistance programs that
pump up the retailers sales. For example, Walmart had an estimated $13.5 billion in
food stamp sales last year. [See Table 3 for state breakdown]
COST TO TAXPAYERS
$6.2 billion
$1 billion
$70 million
WALTON FAMILY
COST TO TAXPAYERS
Cost of preferential tax rate on Walmart dividends claimed by the Walton family (p. 7)
$607 million
ANNUAL TOTAL
$7.8 billion
Estimated number of teachers that could be hired with $7.8 billion (p. 8)
105,131
$3 billion
$13.5 billion
Page 4
Page 5
To get this lower tax rate, CTJ notes that Walmart utilized various tax breaks, including
a strategy known as accelerated depreciation, which allows companies to write off
their capital investments considerably faster than the assets actually wear out. The
report notes that this accelerated depreciation is technically a tax deferral, but so long
as a company continues to invest, the tax deferral tends to be indefinite.18 The Center
for American Progress has noted that, Accelerated depreciation in general should be
thought of as a multibillion-dollar federal spending program that subsidizes business
investments.19
Walmart has consistently used its substantial political power to support cuts in corporate
taxes. Currently, Walmart is a member of at least three business coalitions that lobby
Congress to lower corporate tax rates.20 The company spent more than $41 million
lobbying Congress between 2008 and 2013 and listed taxes as its top lobbying issue for
the last four years.21
Testifying before the Senate Finance Committee in 2011, then Walmart CEO Mike Duke
urged the committee to lower the corporate rate as much as you can, make the tax
base as broad as you can, and move to a territorial system as quickly as you can.22 A
territorial tax system would set the tax rate on offshore U.S. profits at the rate in the
country where they are earned. This would further incentivize U.S. corporations to
shift production and profits to low- or no-tax countries.23 Walmart recently disclosed
that it holds $21.4 billion in undistributed earnings overseas, which are not subject to
the U.S. corporate income tax until they are brought home.24 Under a territorial tax
system, Walmart would likely get a substantial tax break on that off-shore cash, as well
as on its future foreign earnings.
Page 6
Page 7
The Waltons are already the single largest users of the CLAT loopholes, according to
Bloomberg,36 and their use of these loopholes could increase dramatically in the future if
the surviving children of Walmart co-founders Sam and Bud Walton establish additional
CLATs to transfer some or all of the $148.8 billion Walton fortune to their descendants.
If the relevant loopholes remain in the tax code, the Waltons could potentially avoid tens
of billions of dollars in additional gift or estate taxes while providing a massive windfall
of unearned wealth to their heirs.
Eliminating Walmart Subsidies and Walton Tax Breaks Could Provide Funding for 105,000 Public School Teachers (Estimate)
Walmart and the Walton family speak often about the need to improve public
education.37 One way to do that would be to provide decent wages and benefits so
that Walmart employees do not have to rely on taxpayers for support, thereby leaving
more resources available to fund public schools. Another would be for the company and
the family to pay their fair share of taxes to help ensure that the nations schools are
adequately funded.
We estimate that 105,131 teachers could be hired nationwide with the estimated $7.8
billion in tax breaks and public subsidies going to Walmart and the Walton family each
year. See Table 1 and the associated endnotes for an explanation of the methodology
used to derive this estimate.
The impact of re-directing Walmart tax breaks and subsidies to public education at
the state level would be significant. For example, an estimated $813 million would be
available to Texas, where Walmart heir Alice Walton lives enough to pay for nearly
12,000 additional teachers. In Arizona, the home of Walmart Chairman Rob Walton,
the state could hire almost 2,500 additional teachers with the $176 million that the tax
breaks and subsidies cost.
Conclusion
Polls show that Americans want a tax system that requires large corporations and the
wealthy to pay their fair share.38 This report shows that our current system is anything
but fair rather it provides special treatment to Americas biggest corporations and
richest families leaving individual taxpayers and small businesses to pick up the tab.
Walmart, the worlds largest private employer, and the Walton family, which owns a
majority of Walmart shares, benefit from an estimated $7.8 billion in annual tax breaks,
loopholes, and subsidies. The largest share of this windfall an estimated $6.2 billion in
Walmart on Tax Day
Page 8
Page 9
STATE
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
TOTAL:
Employees: 1,404,925
Subsidies: $7.8 Billion
Teachers: 105,131
Page 10
STATE
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
D.C.
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
ROW 1 ........ROW 2
35,016...........$154.6
3,454 .............$15.2
32,438...........$143.2
38,901...........$171.8
80,460...........$355.2
26,325...........$116.2
9,289 .............$41.0
4,423 .............$19.5
600.................$2.6
97,222...........$429.2
53,168...........$234.7
4,020 .............$17.7
7,026 .............$31.0
50,341...........$222.3
36,923...........$163.0
16,557...........$73.1
19,937...........$88.0
28,454...........$125.6
33,621...........$148.4
7,436 .............$32.8
18,573...........$82.0
12,252...........$54.1
31,076...........$137.2
20,997...........$92.7
22,321...........$98.5
40,374...........$178.3
5,096 .............$22.5
11,207...........$49.5
14,251...........$62.9
STATE
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
ROW 1 ........ROW 2
7,839 .............$34.6
18,593...........$82.1
14,322...........$63.2
37,034...........$163.5
52,459...........$231.6
4,396 .............$19.4
49,716...........$219.5
31,692...........$139.9
11,482...........$50.7
48,871...........$215.8
14,552...........$64.2
2,493 .............$11.0
28,662...........$126.5
4,808 .............$21.2
38,470...........$169.8
154,471 ........$682.0
16,422...........$72.5
911.................$4.0
41,950...........$185.2
19,350...........$85.4
11,959...........$52.8
28,641...........$126.5
4,574 .............$20.2
TOTAL:
Employees: 1,404,925
Page 11
STATE
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
D.C.
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
STATE
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Montana
TOTAL:
Page 13
Endnotes
Alexander E.M. Hess, The 10 largest employers in America, USA Today (August 22, 2013). http://www.usatoday.
com/story/money/business/2013/08/22/ten-largest-employers/2680249/
Wal-Mart Stores, Inc., Form 10-K (filed March 21, 2014), p. 13. http://www.sec.gov/Archives/edgar/
data/104169/000010416914000019/wmtform10-kx13114.htm
Wal-Mart Stores, Inc. Walmart reports Q4 underlying EPS of $1.60, Fiscal 2014 underlying EPS of $5.11 (Feb. 20,
2014). http://news.walmart.com/news-archive/investors/2014/02/20/walmart-reports-q4-underlying1-eps-of160-fiscal-2014-underlying1-eps-of-511
4
This calculation of Walton family share ownership is derived from Wal-Mart Stores, Inc., Proxy Statement (filed
April 22, 2013), p. 67. http://www.sec.gov/Archives/edgar/data/104169/000130817913000238/lwalmart_def14a.
htm
Shelly Banjo, At Walmart, Maturity Means Fat Dividends, Wall Street Journal (June 1, 2012). http://online.wsj.
com/news/articles/SB10001424052702303552104577440144281187990
Forbes, The Worlds Billionaires (Accessed March 3, 2014). http://www.forbes.com/billionaires/list/#tab:overall_search:walton; Megan Willett and Mike Nudelman, Meet the Waltons: A Guide to Americas Wealthiest Family,
Business Insider (Oct. 9, 2013). http://www.businessinsider.com/meet-the-waltons-wal-mart-family-tree-2013-10
Politifact Wisconsin, Just How Wealthy is the Walton Family? (November 27, 2013). http://www.politifact.
com/wisconsin/statements/2013/dec/08/one-wisconsin-now/just-how-wealthy-wal-mart-walton-family/. Jesse
Bricker, Arthur B. Kennickell, Kevin B. Moore, and John Sabelhaus, Changes in U.S. Family Finances from 2007 to
2010: Evidence from the Survey of Consumer Finances, Federal Reserve Bulletin, vol. 98, no 2, (February 2012),
pp. 1-80. http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf (The Politifact Wisconsin story rates
as true the claim that the Waltons have as much wealth as 41.5 percent of American families. Bricker et al report
that the total number of families represented in the 2010 Survey of Consumer Finances upon which this claim
was based is 117.6 million; 41.5 percent of 117.6 million is 48.8 million).
Democratic Staff of the U.S. House Committee on Education and the Workforce, Walmarts low wages and their
effect on taxpayers and economic growth (May 2013). http://democrats.edworkforce.house.gov/sites/democrats.edworkforce.house.gov/files/documents/WalMartReport-May2013.pdf
The Committees report describes the challenge of extrapolating this way: Because of varying program eligibility requirements across states, extrapolating taxpayer costs for Wal-Mart stores in other states based on the Wisconsin data is difficult. Wisconsins poverty rate stands well under the national average, so it would be reasonable
to assume that the households of Wal-Mart employees in other states would be more likely to qualify for public
assistance. On the other hand, Wisconsins Medicaid program eligibility requirements are more inclusive than
other states, meaning Wal-Mart employees in other states could find themselves ineligible for Medicaid while
their Wisconsin counterparts of equivalent incomes would be eligible.
10
For the number of U.S.-based Walmart employees, we totaled the number of employees from U.S. states on
Walmarts website (accessed March 29, 2014). The report from the U.S. House Committee on Education and the
Workforce, referenced in Endnote 9, uses total employees in Wisconsin. For Arkansas and California, the employee totals were adjusted slightly to take into account the estimated number of employees in Walmarts Home Office in Arkansas (10,000 employees were subtracted from the total) and California-based eCommerce operations
(1,500 employees were subtracted from the total). This made the total U.S. employees: 1,405,425. The source for
11
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the 10,000 employees at Home Office is http://www.thecitywire.com/node/31462 and the source for the estimated 1,500 employees in Silicon Valley e-commerce is: http://www.wired.com/2013/03/why-walmart-wants-to-bea-startup/
Seeking Alpha, Walmart Stores CEO Discusses F4Q 2014 Results Earnings Call Transcript (Feb. 20, 2014).
http://seekingalpha.com/article/2034103-walmart-stores-ceo-discusses-f4q-2014-results-earnings-call-transcript?part=single
12
Wal-Mart Stores, Inc., Form 10-K (filed March 21, 2014), p.3. http://www.sec.gov/Archives/edgar/
data/104169/000010416914000019/wmtform10-kx13114.htm
13
Shelly Banjo and Annie Gasparro, Retailers Brace for Reduction in Food Stamps: Expiration of Added Benefits
Will Remove $11 Billion in Aid Over Three Years, The Wall Street Journal (Nov. 4, 2013). http://online.wsj.com/
news/articles/SB10001424052702303843104579168011245171266?mod=djemITP_h; Kim Souza, Wal-Mart
downplays SNAP cuts (Updated), CityWire (October 16, 2013). http://www.thecitywire.com/node/30090
14
United States Department of Agriculture Food and Nutrition Program, Supplemental Nutrition Assistance Program Participation and Costs (Retrieved April 4, 2014). http://www.fns.usda.gov/pd/snapsummary.htm
15
Citizens for Tax Justice and the Institute on Taxation and Economic Policy (CTJ/ITEP), Sorry State of Corporate
Taxes: What Fortune 500 Firms Pay (or Dont Pay) in the USA and What They Pay Abroad 2008-2012 (February2014).
http://www.ctj.org/corporatetaxdodgers/sorrystateofcorptaxes.pdf
16
Tax Policy Center, Business Taxation: What are the statutory and effective corporate tax rates? (July 9, 2008).
http://www.taxpolicycenter.org/briefing-book/key-elements/business/statutory.cfm
17
18
Center for American Progress, Tax Expenditure of the Week: Accelerated Depreciation (March 23,
2011). http://www.americanprogress.org/issues/open-government/news/2011/03/23/9370/tax-expenditure-of-the-week-accelerated-depreciation/
19
Kelsey Snell, Corporate Tax Reform Dead? Dont tell these corporate groups, Politico (February 5, 2014) http://
www.politico.com/story/2014/02/tax-reform-corporate-groups-103153.html
20
Center for Responsive Politics, Lobbying Disclosure (Accessed April 7, 2014). http://www.opensecrets.org/lobby/firmsum.php?id=D000000367&year=2013
21
Mike Duke, Testimony before the Senate Finance Committee on Corporate Tax Reform (July 26, 2011). http://
news.walmart.com/executive-viewpoints/mike-duke-senate-finance-committee-testimony
22
Chye-Ching Huang, Chuck Marr, and Joel Friedman, The Fiscal and Economic Risks of Territorial Taxation, Center on Budget and Policy Priorities (January 31, 2013). http://www.cbpp.org/cms/?fa=view&id=3895
23
Wal-Mart Stores, Inc., Form 10-K Exhibit 13 (filed March 21, 2014), p. 47. http://services.corporate-ir.net/SEC.
Enhanced/SecCapsule.aspx?c=112761&fid=9351219
24
25
Good Jobs First, Walmart Subsidy Watch (Retrieved March 28, 2014). http://www.walmartsubsidywatch.org/
Good Jobs First, Shifting the Burden for Vital Public Services: Walmarts Tax Avoidance Schemes (February 2011),
p. 12. http://www.goodjobsfirst.org/sites/default/files/docs/pdf/walmart_shiftingtheburden.pdf
26
United for a Fair Economy, Ending Special Tax Breaks for Capital Gains & Dividends (Retrieved April 7, 2014).
http://www.faireconomy.org/wealth_vs_work
27
This estimate is based on Walton family share ownership reported to the Securities and Exchange Commission and Walmarts announced dividend for Fiscal Year 2015. For share ownership see: Wal-Mart Stores, Inc.,
Schedule 13G/A (Filed Feb. 11 2014). http://www.sec.gov/Archives/edgar/data/104169/000119312514045720/
d672680dsc13ga.htm. For Walmarts FY 2014 dividend, see Wal-Mart Stores, Inc., Walmart increases annual
dividend 18 percent to $1.88 per share (February 21, 2013). http://news.walmart.com/news-archive/2013/02/21/
walmart-increases-annual-dividend-18-percent-to-188-per-share
28
In order to estimate annual Walton tax savings from the preferential tax rate on Walmart dividends, $3.1 billion
was multiplied by 19.6 percent the difference between the top tax rate on wage income (39.6 percent) and the
29
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top tax rate on long-term capital gains and qualified dividends (20 percent). (The income is also subject to the
Hospital Insurance tax at a rate of 3.8 percent regardless of how it is taxed under the personal income tax.)
Wal-Mart Stores, Inc., Walmart raises annual dividend to $1.92 per share, representing the 41st consecutive year of dividend increases (February 20, 2014). http://news.walmart.com/news-archive/2014/02/20/
walmart-raises-annual-dividend-to-192-per-share-representing-the-41st-consecutive-year-of-dividend-increases
30
This estimate of the value of the assets transferred to the trusts was determined by examining IRS returns
(Form 5227) filed by the Walton CLATs from 2007 to 2012. Bloomberg offers an estimate of $9 billion (see Mider,
Endnote 34).
31
Zachary R. Mider and Alex Tribou, How to Preserve a Family Fortune Through Tax Tricks, Bloomberg News
(September 12, 2013). http://www.bloomberg.com/infographics/2013-09-12/how-to-preserve-a-family-fortunethrough-tax-tricks.html
32
Perkins Coie, Gifts to Charitable Lead Trusts Another Tax Advantaged Way to Give Property (Feb. 15, 2011).
http://www.perkinscoie.com/gifts-to-charitable-lead-trusts-another-tax-advantaged-way-to-give-property-july-28-2006-07-28-2006/
33
Zachary R. Mider, How Wal-Marts Waltons Maintain Their Billionaire Fortune, Bloomberg (September 12, 2013).
http://www.bloomberg.com/news/2013-09-12/how-wal-mart-s-waltons-maintain-their-billionaire-fortune-taxes.
html. While the details are rather complicated, the loophole works by allowing the Waltons to direct some of the
CLATs investment income to a tax-exempt entity of their choice (in this case, the family-controlled Walton Family
Foundation). Over the life of the trust, if the total of those guaranteed payments is at least equal to the original
value of assets placed in the trust, what remains of the original assets plus any additional income earned by the
trusts will eventually go, free of gift or estate tax, to the CLATs non-charitable beneficiaries (presumably, members of the Walton family). The IRS adjusts the amount of the charitable payments required to obtain these estate
tax benefits based on interest rates at the time the CLAT is established. By setting up the CLATs when interest
rates were low, the Waltons increased the likelihood that the trusts assets will appreciate at a rate sufficient to
make the required charitable payments and also transfer at least as much value to the non-charitable beneficiaries as was originally placed in the trusts.
34
We arrived at this estimate of estate tax avoidance by multiplying 40 percent (the estate tax rate) by $7.49 billion (the lower end of our estimate of the assets transferred to the trusts less the $5.25 million federal allowance),
which yielded a result of $2.99 billion.
35
36
The Walton Family Foundation, Education Reform (Retrieved April 7, 2014). http://www.waltonfamilyfoundation.org/educationreform
37
38
Wal-Mart Stores, Inc. Our Story: United States (Retrieved April 10, 2014). http://corporate.walmart.com/
our-story/our-business/locations/#/united-states
39
State population shares derived from: U.S. Census Bureau, Population Division, Table 1. Annual Estimates
of the Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2012 (NSTEST2012-01) (Released December 2012). http://www.census.gov/popest/data/state/totals/2012/tables/NSTEST2012-01.xls
40
We estimated the number of new teachers that could be hired in each state by dividing the total Walmart and
Walton subsidies and tax breaks allocated to the state by the estimated annual cost of a public school teacher in
that state. In order to estimate the annual cost of a teacher by state we used state-level teacher salary data [see
National Education Association, Rankings and Estimates: Rankings of the States 2012 and Estimates of School
Statistics 2013 (December 2012)]. We adjusted the salary data upward to account for the fact that salary constitutes just 70.7 percent of the annual cost of a public school teacher [see Bureau of Labor Statistics, Employer
Costs for Employee Compensation December 2013 (March 12, 2014). http://www.bls.gov/news.release/pdf/
ecec.pdf ]. Note: The NEA report does not include salary data for Puerto Rico so the estimated salary for teachers
41
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in Puerto Rico was based on the U.S. Bureau of Labor Statistics figure for Secondary School Teachers (see http://
www.bls.gov/oes/2012/may/oes_pr.htm).
42
Kim Souza, Wal-Mart downplays SNAP cuts (Updated), CityWire (October 16, 2013). http://www.thecitywire.
com/node/30090
United States Department of Agriculture, Supplemental Nutrition Assistance Program: Number of Persons
Participating (Data as of April 4, 2014) (Retrieved April 10, 2014). http://www.fns.usda.gov/pd/29snapcurrpp.htm
43
Kaiser Family Foundation, Average Monthly Food Stamp Benefits Per Person (FY2012) (Retrieved April 10,
2014). http://kff.org/other/state-indicator/avg-monthly-food-stamp-benefits/
44
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