Wal-Mart: America's Tax Deadbeat

Local officials who welcome Wal-Mart to town, love to praise the taxes---but the giant retailer hates to pay the taxes. In fact, Wal-Mart's corporate mantra appears to be "low, everyday taxes -- always."

A report released this week by the non-profit group Good Jobs First, concludes that Wal-Mart methodically works to lower its taxes by challenging the assessed value of its stores and distribution centers. Just as the company has become legendary for shaking down its vendors---so the retailer shakes down cities and towns for tax rebates.

The nonpartisan research center in Washington, D.C. documented in an earlier study how Wal-Mart has benefited from billions of dollars in public subsidies to build its stores and site infrastructure. Their new analysis, Rolling Back Property Tax Payments, charges that although the financial take is not as large as its public welfare subsidies---Wal-Mart "drains vitally needed funds from communities by regularly challenging the valuation put on its properties by public officials." According to Philip Mattera, research director of Good Jobs First, "When the company succeeds in one of these challenges, it diminishes the funds available to pay for education, police and fire protection, and other essential services provided by local governments."

Good Jobs First reviewed a national sample of Wal-Mart stores and all of its distribution centers open as of the beginning of 2005. Wal-Mart has filed assessment challenges at more than one-third of its facilities around the country. At many facilities there have been appeals in multiple years. Overall, Good Jobs First estimates that Wal-Mart filed more than 2,100 property tax challenges nationwide. "These systematic property tax challenges are part of a larger pattern of state and local tax avoidance by Wal-Mart," Mattera explained.

Property assessment disputes pit Wal-Mart's legal team against local assessors. Such battles are an intimidating financial club wielded by Wal-Mart to lower its cost of doing business. If local assessors balk at giving relief, Wal-Mart just takes their case to a state appellate board, tying up local staff and resources.

Yet Wal-Mart's success rate in such appeals is as low as its prices. "We were surprised to find that Wal-Mart, despite its enormous resources, loses more assessment challenges than it wins," said Greg LeRoy, of Good Jobs First. "Even when it wins a reduction, it often fails to get as much as it wanted, meaning that the overall dollar amount of Wal-Mart's tax reductions is far below what the company sought."

The Good Jobs First report found that the company's win rate in assessment challenges is just under 50%, and that it has won a total of about $30 million from those appeals over the past decade. Good Jobs First found significant variation in the frequency of assessment challenges from state to state. The largest numbers, both in percentage and absolute terms, were found in Texas. More than 80% of the Texas stores had at least one tax challenge. Other states found to have high appeal rates were Colorado, Kansas, California, New Hampshire and Georgia. While Texas has the most appeals, the company's success rate in the state has been only 43%, far below the 82% success rate in Florida, for example. In California, the state where Good Jobs First found the second largest number of appeals, its success rate has been even lower: 25%.

Although Wal-Mart's overall tax abatement campaign has drawn mixed results, the company has won big tax cuts in some towns. In 2004, Wal-Mart's distribution center in Tomah, Wisconsin was lowered from $43.6 million to $31.4 million, and the company clawed back $300,000 for each of three years--a total of $949,000.

I have been writing about Wal-Mart's tax abatement campaign for at least eight years. Back in 1999, Wal-Mart dragged the small town of Wilton, New York to court over its property tax bill. Wal-Mart disputed its property valuation in Wilton for 4 years, and ultimately sued the town in the New York State Supreme Court. Wal-Mart wanted Wilton to slash its discount store assessment from the $7.5 million in valuation, to $3 million--a 60% tax reduction. The taxpayers of Wilton had to hire a special attorney to argue the case, and spent $2,250 in tax dollars to have a special appraisal done. Because of the expense of defending itself against the Wal-Mart litigation, the town had to call on the School District in Saratoga Springs, and Saratoga County to come up with the cash to defend against Wal-Mart---because the county and the school district stood to lose revenue if Wal-Mart's property taxes were slashed. That same year, Wal-Mart bragged that it paid $28 million in local and state taxes in New York state.

In 2006, the company picked the same fight with Geneva, New York. Wal-Mart sued to get its assessment more than halved, from $4.8 million to less than $2.3 million. Wal-Mart charged that their store's assessment was too high, because property in the town was assessed at 65% of full value. Wal-Mart eventually dropped the lawsuit, saying "the town has been working well with Wal-Mart on the supercenter...It was a business and policy judgment, in view of the high degree of cooperation. Even though we still object to the store's assessment, we'd rather go forward with what's being done on the supercenter." A local citizen's group fighting the Geneva superstore, questioned the timing of the retailer's lawsuit, because it was filed only five weeks after the chain announced its supercenter expansion plans, and just as the permit process was beginning. The lawsuit put pressure on the town to act favorably on the superstore. The citizen's group charged that Wal-Mart used the lawsuit as "a bargaining chip" to get its supercenter built. The Town's Supervisor acknowledged that Wal-Mart had unsuccessfully tried to lower its assessment for years, and that Wal-Mart had filed similar lawsuits against municipalities across the New York state. The Town Assessor in Seneca Falls, New York admitted that Wal-Mart files lawsuits against municipalities where supercenter projects are pending and they have existing stores on the real estate market. It's easier to sell an existing store if it has a lower assessment, she said. Wal-Mart's lawyer admitted his company had been "very successful" in getting cities and towns to lower their assessments.

In small town after small town, Wal-Mart has picked the same tax fight. In places like Coolbaugh, Pennsylvania, or Saukville, Wisconsin, Wal-Mart promises a tax revenue bonanza, but as soon as they get in, they try to nickel and dime their taxes down. In Coolbaugh, Wal-Mart challenged the assessment on its 208-acre site for a large distribution center. The County Commissioners in Monroe County, along with Coolbaugh officials, and the Pocono Mountain School District, had to raise $6,000 just to hire an appraiser to review the site's value.

In Saukville, Wal-Mart attempted to lower its store assessment by $1 million. According to the editor of the Ozaukee Press, the abatement would lower Wal-Mart's tax bill by $21,306. The tax cut would have stripped $11,469 from the Port Washington-Saukville School District---an amount, said the newspaper, "that far exceeds the value of the store's well-publicized Teacher of the Year award." The editor of the County newspaper wrote a column criticizing Wal-Mart's move. "Never mind the fact that the value of almost every property--commercial, industrial and residential--went up this year as a result of a village-wide reassessment; the corporation doesn't want to pay what the village says is its fair share of taxes." The editor added, "No matter how hard the store tries to give the impression that it is a concerned member of the business community, the truth is it is part of a chain whose interest in Saukville is, at best, fleeting, and over which the village has little influence."

The Good Jobs First study demonstrates once again that taxes are just another business expense for Wal-Mart to try to force down---any way possible. In this case, the losers are the very same officials that opened their arms to the retailer.

When this tax dodge study came out this week, instead of assailing the message, Wal-Mart went after the messenger. Study author Phil Mattera told me that Wal-Mart initially did not know how to respond to the Good Jobs First study. "When contacted by the New York Times, which ran the first story on the report, the company was not willing to comment, Mattera said. "Then they reverted to their common practice of union baiting. When reporters contacted Wal-Mart, their public relations people apparently thought that calling Good Jobs First a labor-supported group would discredit our findings. Actually, since our founding, we have received less than 5% of our funding from unions--and most of that has been for consulting work, not donations. Nearly all our money comes from foundations."
Mattera says that Wal-Mart claims it evaluates each tax assessment on its own merits. "But it is hard to believe that assessors have made serious errors at more than one-third of all of Wal-Mart's facilities," he notes. "As for the results themselves, what we have been trying to get people to focus on is Wal-Mart's hypocrisy. When the company is trying to get into a community, it makes great claims about economic benefits. Yet when they later look for assessment reductions, they have to argue in effect that property values have declined."

A colleague of mine says that all major corporations try to push down their property tax costs. "I sit on a tax board of review in small town," he writes. "The Wal-Mart landlord came in last year to appeal their assessment. Long story short -- he is 'connected' to local family of businessmen who presented us with an appeal 'we can't refuse.' Wal-Mart never stepped foot inside that meeting. They came in without an appointment and walked out as the only business to get their assessment lowered. They presented no evidence other than they just wanted to have it lowered. It came down to my vote to break the tie. I voted for it because the assessor recommended we do so. It came down to a matter of $20,000 of tax breaks a year for Wal-Mart. It would cost $20,000 of village funds to fight them in an appeal. We all knew that voting no could mean a world of hurt for us personally. It makes it so someone doesn't even want to serve on these boards."

This coming year, as many as several hundred communities will receive such a visit from Wal-Mart's lawyers regarding a tax abatement. But enthusiasm for Wal-Mart at the local level continues unabated. Four weeks ago, when Wal-Mart opened up its new supercenter in the small southern Oregon community of Eagle Point, Mayor Leon Sherman was front and center at the ribbon cutting. "We've been working for three or four years to get this supercenter," the Mayor said, "and we're really happy that they're here. Not only will the store bring extra jobs, but it will also provide an additional tax base for the city as well as the school district."

Mayor Sherman is in for a big, supercenter surprise.

Al Norman is the founder of sprawl-busters.com, and author of the book, "The Case Against Wal-Mart."

Comments

[givemycountryback]

I hate Walmart. As far as I am concerned it is a blight on our society. I have talked to some of their employees, and they say it is a terrible place to work. But you know, they come into small towns and drive everybody out of business where else are you going to work.Their purchasing departments have driven a lot of vendors out of business. These vendors are stupid enough to cancel accounts with their long time customers and go strictly with walmart. If Walmart cancels their contract over a penney or two, you are out of business. And most of their stuff is junk.

[MrXfromplanetX]

Mayor Leon Sherman probably got a nice payoff.

In the town where I live, they declared someones horse property blighted, confiscated it, and gave the land to Walmart. I signed the petition to fight this, but we lost. That's something I like about Ron Paul. He wants to do away with eminent domain.

For an even better look at how Walmart screws people over, check out http://www.walmartmovie.com/

[FreedomCorpse]

If they used eminent domain to actually help the people rather than the corporations, it could be a good thing. I've never seen it used that way though.

[shano]

In my town, Walmart blackmailed the town council by requesting 6 million in tax breaks. Holding over their head that they would simply build on the Yavapai Indian reservation if they did not get the tax break.

The town was looking at getting no sales taxes, etc. if Walmart built on the reservation.

Walmart now has two stores in this town of 30,000. With plans to build a third 10 miles away.

I NEVER SHOP AT WALMART. Ever. I suggest everyone do the same. We have a nice Costco that has better prices anyway, haha.

[LeftRight]

Not only are they coming out and fighting their tax bills, but people don't realize just how bad they really are for the local economy! Where I'm at just had a wally world open up 6 mos ago, and they had more than 15,000 people apply for 450 jobs. They've employed those 450, but during the same time more than 600 people have lost jobs in the area from other employers. The media have only mentioned the 450, saying that it's a good thing. I had to search for almost an hour to find out the numbers that lost their jobs, and the fact that the pay for the 600 was almost 150% of the average pay for the 450.

[Shortyfuse]

Yes, and let's tax those gambling casinos to death also. Maybe they will outsource.
I do not have anything aginst gambling on a moral ground. It is the coruption of government officals and the replacing of our manufacturing revenues with gambling dollars that I hate. ( Where are the right wing bible thumpers when you need them?)
The Democratic governer who was just run of the road and nearly lost his life, was run of the road by a hit and run gambling casino thug. But all you heard was the fact that he did not wear a seat belt.
All right all you young grafftist. Spray paint where it counts. That is how you can help and get your kicks at the same time.
JOIN A UNION NOT THE ARMY AND REALLY FIGHT FOR AMERICA

[zannamar]

Recently, a petition has been going around in my city that requires the public vote on whether Walmart can build yet another store in our city. As they have continuely abandoned locations just to build another a block away, I support this initiative. If walmart had its way they would have a store every 2 miles all over the country. We are almost at this point in our city. I know Walmart has received tax breaks and sometimes city tax dollars to help them build a new store. cities pay for traffic lights and widened roadways whenever Walmart puts in a new location. As much money as they make, they can pay for these changes(that enhance their business) themselves. NO TAX BREAKS FOR WALMART!!

[themodernleader]

When President Reagan had laws passed to permit Wall Street to invade Main Street in the name of efficiency, we received monopolistic capitalism and a destroyed manufacturing base instead. Such unprecedented power is by its very nature corrupt and overbearing.
The money is pulled out of the local communities. Ultimately,citizentry specialized knowledge and skill decline, the decision making declines, the leadership competence declines, the community is left with a shell of underclass paying jobs, massive welfare and a submerged tax base.
And what is the political candidates' solutions? At the local level keep raising taxes on what is left of the midddle class. At the national level, extend the free trade agreements and keep borrowing and spending.
There are no friends of the middle American in this Century. Before the eyes of the world an arrogantly aggressive organization is observed in perilous decline.

[MrLiberal53]

Wal-Mart does have a responsibility to pay its fair share of taxes, the benefits it brings to communities is far less than most would assume.
First, Wal-Mart lowers the average pay for hourly workers whenever it enters a job market. Lower prices are not adequate to offset the amount of wage decreases brought on by Wal-Mart.
Secondly, Wal-Mart has cost the American workers needed jobs. Wal-Mart relies more and more each year on goods produced in China, which has a net result of eliminating American jobs. Wal-Mart has interveened on behalf of Chinese producers being sued by American television manufacturers when it was found that China was illegally dumping in the US market.
When Wal-Mart wants to enter a city it does so no matter the desires of the community. Wal-Mart has employed doctored documents to create a case when local people have fought back to keep out Wal-Mart. And of the top ten vendors doing business with Wal-Mart, over 60% have declared bankruptcy in the past few years.
So, it would seem that Wal-Mart is not a good corporate neighbor. The walmartization of America will be a blight as severe as almost any number of problems this nation will face in the next decade.

[jgo]

Does anyone pay enough taxes in your eyes?
At least all the citizens of this town now saves 30%. Most people do not care where their relief comes from.

[MrLiberal53]

Yes, the Middle Class pays more than its share of the tax burden in this nation. Those in the upper 10% of wealth in the US do not, however, pay their fair share. And the question is irrelevant to the question concerning Wal-Mart.
Where do you get the 30% figure, that is a gross overstatement of the amount anyone saves at Wal-Mart. And any relief that comes from shopping at Wal-Mart pales in comparison to the cost of Wal-Mart's methods of doing business.
The simple fact of the matter is a lot of people do care about the manner in which Wal-Mart has wrecked the economy and weakened the structure of small towns across the US.

[zannamar]

Most items at walmart are equal in price to Target, Grocery stores(Publix), and Pharmacies. They trick people buy offering Loss Leaders($20 DVD players, etc). If you shopped around you would be better informed. Walmart also passes out to new employees information of receiving Government assistance. So you tax dollars are going to Walmart employees. How about that for Walmart Savings!!

[FreedomCorpse]

Most people would get relief if the jobs they had paid 30% more with healthcare benefits, not paying 30% less for the cheap junk they buy which will break in 6 months anyways.

[Advocate123]

If Wal-Mart can offer $4 generic drugs and $9 birth control pills, I'm sorry, they don't need to pay taxes.

[cavegal]

Check out Costco, they are even cheaper on generic drugs, pay their employees better and the owner of Costco still only pays himself an annual salary of $100,000. And the guy still goes out on the floor everyday to help customers and work with the employees. Oh, and their employees are happy and helpful and get health benefits!

Best solution to WalMart creepy business practices is to spend your dollars at their biggest competition which in most cities is Costco. I realize in many rural areas there is no other option except WalMart, however those of us living in large metropolitan areas can make a dent in their sleazy practices. I am happy to say that I never shop at WalMart.

[zannamar]

They offer $4 generic drugs and $9 birth control so their own employees can afford it. That makes them feel better since they don't provide health insurance and pay minimum wage. When the company earns billions a year it Definitely should pay taxes!!!!

[Nommo]

Walmart's success in proportional to the stupidity and venality of local politicians and the fools that elected them.