CREDIT: Associated Press
Since 2009, Walmart has ducked $104 million in taxes by exploiting a tax loophole around bonus payments to just eight top executives, according to a new report from the Institute for Policy Studies (IPS) and Americans for Tax Fairness (ATF).
The retail giant is using a longstanding tax loophole for deducting executive pay that comes in the form of stock options and other bonuses tied to company performance. The eight top employees tracked in the IPS/ATF report earned $298 million in deductible compensation from 2009 to 2014, creating nearly $300 million in write-downs for the company. Those deductions over the years translate into a $104 million reduction in what the company has had to pay the Internal Revenue Service.
A Walmart spokeswoman told the Huffington Post that the ATF/IPS report is “flawed” and defended the company by saying that “we comply with federal tax laws.” No one is disputing the legality of the executive compensation deductions revealed in the IPS/ATF report, but a pair of lawmakers have been trying to reform the system so that large, highly profitable corporations would no longer be able to get taxpayer subsidies for their massive executive pay packages.
That reform effort has made little progress to date, however, even as evidence piles up that the business world’s executive compensation practices are broken. Time after time, “performance pay” bonuses get paid even when executives fail to hit the performance targets set for them, in part because the corporate pay boards that determine executive compensation have stopped behaving like independent entities and started catering to CEO whims. The disconnect between company performance and CEO pay is so severe that almost one in four of the most well-paid corporate officers in America over the past quarter-century oversaw a bailout, were caught committing fraud, or were fired.
This is only the most recent example of how Walmart’s pay policies cost the public. The company’s commitment to low wages and part-time hours leaves its front-line employees in poverty, which means that those working people rely upon public assistance programs to make ends meet. Taxpayers spend about a million dollars per year on such benefits just at a single 300-worker Walmart Supercenter. With 3,275 such Supercenters in the country, and another 902 smaller Walmart locations that incur further public assistance costs, the company’s overall public assistance bill measures well into the billions of dollars.
Raising wages far enough to get its employees off of food stamps would only require the company to raise prices by about 1.4 percent, according to a Marketplace/Slate joint analysis. Instead, the company does things like hold a canned food drive for its own employees during the holiday season.
Last year, Walmart’s U.S. CEO was paid a $1.5 million bonus even though his portion of the company fell short of the sales goal that was supposed to trigger the bonus. He earned $11.5 million after the bonus.