7 ms·

The Walmart Tax Every American Taxpayer Pays

fedups 9y ago
I was expecting a discussion of the minimum wage that Walmart lobbies for in order to hurt smaller competitors. Probably expecting too much subtlety.
- specialist 9y ago
  They also outsource (socialize) their employee's healthcare costs, in a way that other businesses cannot.
- djrogers 9y ago
  What are you referring to? Walmart already pays employees well above the legal minimum wage, despite the rhetoric thrown about... [1]http://www.cnbc.com/2017/01/27/wal-mart-is-making-it-easier-for-workers-to-earn-those-pay-hikes-.html http://www.cnbc.com/2017/01/27/wal-mart-is-making-it-easier-...
splintercell 9y ago
I never bought this argument that somehow Walmart is abusing the system. Abusing the system implies that only if Walmart stops doing the abuse, somehow abuse will stop, but this clearly is not the case. Contrary to what writers of this article believe, prices are not formed in isolation of buyer and seller, in this case labor is being sold, and if Walmart does not lower the salaries and transfer the savings to the customers then some other company is going to beat the to it and manage to provide the cheapest good for the same quality. Most people believe that when a company does something X, to achieve a reduction in costs, then it simply uses it to increase it's own profit margin, but they don't understand that instead of increasing their current profit margin, they can increase their future profit margin by selling their products for less by passing that lower cost to the customer. Calling it a 'Walmart' tax is a spin on things which is aimed to invoke emotional imagery, it's like if NJ lawmakers called a tax as 'Tesla tax' because by bypassing the dealers they are putting more people out of job and on welfare, therefore the tax which will be used increase the benefits is 'Tesla Tax'. There is a wide welfare structure in America, and the market will reflect that. If you give certain group of people free healthcare, then their employers will stop providing them with healthcare, if they give 3% 401K contribution to all working employees then yes, their employer's contribution will go down by 3%.
- the_gastropod 9y ago
  > if Walmart does not lower the salaries and transfer the savings to the customers then some other company is going to beat the to it and manage to provide the cheapest good for the same quality This excuse can be used to justify virtually any deplorable behavior by a corporation. "If _we_ don't cut prices by dumping waste directly into the river, another company will!" Costco competes head-to-head with Walmart on prices, and doesn't treat their employees like cattle.
  - humanrebar 9y ago
    Paying people less or hiring people getting government benefits is nothing like dumping poison into a water supply.
    - hedora 9y ago
      It is similar to slowly poisoning the water supply when you destroy dozens to hundreds of local mom and pop stores with each supercenter (which leads to decreased life expectancy in the community, due to drug/alcohol abuse, suicide, etc). Anyway, that well-documented boat sailed in the '90s, and now we have Amazon (and I think Amazon deliveries are a net good thing). What really bugs me is that I have to subsidize low wages at walmart. If the US would just switch to guaranteed income or raise the minimum wage, walmart prices would go up something like 1%, but their employees would make at least 33% more. Then my taxes could be used for something useful, like education.
      - jrs95 9y ago
        Those expenses would also be passed on to working class people who are not making much more than the minimum wage, though. Paying for it with taxation is probably better in that regard. Although that could be offset in other ways. Adjustments to EITC and universal child care could make a huge difference for low income people, without having to have a full guaranteed income.
      - specialist 9y ago
woopwoop 9y ago
It seems to me that whether Walmart gains or loses from a welfare benefit paid to workers depends on the structure of the benefit. IANAE. If the benefit is tied to working, like the EITC, it makes the worker willing to work for a lower wage. i.e. the result of the benefit is to shift the supply curve for labor down, so that the equilibrium wage is lower. On the other hand, if the benefit is not tied to working, it seems to me that it shifts the supply curve up. I'm less willing to take a low-paying job once I know I at least won't starve. This means that Walmart pays more. That welfare benefits are means tested complicates things significantly.
adventured 9y ago
First of all, Walmart I'll note consistently pays one of the world's highest corporate income tax rates, at around 30%. Their income tax is about equal to what that article claims the subsidy is. Ok, let's present the alternative then. Walmart automates its massive retail operations substantially over the next 10-15 years, using robotics and AI. Their goal is to match the dollar of sales to employee ratio of, say, beloved Costco. And or try to keep up with Amazon's ability to highly automate its operations (competitive pricing advantages etc). There went one million jobs, consisting largely of employees with few skills and very limited alternative employment prospects. Now what? Here's the reality when you remove the one-sided emotion-driven premise in the article: it's better to subsidize those employees to a modest extent, than to a 100% extent (which is the scenario coming for tax payers; the harder / more expensive you make it on Walmart to employ those people, the faster they're going to automate their jobs away). Also, if you want to reduce the subsidy, raise the minimum wage (or the earned income tax credit, a vastly superior approach; which then begets a further debate on the subsidy), which Walmart has routinely supported. They support it because it harms their weaker competitors, whereas Walmart can deal with it. When you raise the minimum wage, Walmart will either optimize by firing workers / using automation further, or they'll push increased costs onto customers, which gets you right back to the same place in terms of tax payers paying for Walmart's employees (hint: every employed adult in America pays for their employees, they have $485 billion in sales).
- gruturo 9y ago
  > Ok, let's present the alternative then. >Walmart automates its massive retail operations substantially over the next 10-15 years, using robotics and AI. You're presenting this as an alternative, but this is happening _anyway_ as soon as practically viable. Underpaying workers simply moves this break-even point by some years, it doesn't change anything else and is not an alternative.
- mtberatwork 9y ago
  > the minimum wage ... which Walmart has routinely supported. Do you have any links for further reading on this? From what I've read, they've only raised their min wage from $9 to $10 after protests by their work force. I certainly wouldn't call this support of raising the minimum wage (but perhaps they've since changed their tune?).
hedora 9y ago
Better writeup: https://americansfortaxfairness.org/files/Taxpayers-and-Walmart-ATF.pdf https://americansfortaxfairness.org/files/Taxpayers-and-Walm...
anothercomment 9y ago
So these people would be better off if they didn't have a job at Walmart?
Thriptic 9y ago
This seems like a pretty straight forward issue to me. If the minimum wage is too low for employees to live on in your state, then raise the minimum wage. Don't get angry with a corporation for complying with wage laws that your state set. It should be pretty unsurprising that a company is seeking to pay minimum wage for unskilled labor. Also if you don't want to offer tax incentives to a corporation then complain to your legislators. I'm pretty sure every company would jump at the opportunity to leverage tax incentives, not just Walmart.
- maxerickson 9y ago
  You could look at a newspaper column as a way of trying to gain public support for your view, public support that would be useful in getting legislators to act.
  - Thriptic 9y ago
    Sure, but they are framing the problem incorrectly which will poorly bound the types of solutions legislators will shoot for. If the problem is framed as "Walmart is abusing the system" then the proposed solutions will probably all be some variant of "punish Walmart". However, the problem is actually that the system (wage laws, tax laws, etc) is poorly serving its constituents, not that Walmart is abusing it. The proposed solutions to this problem look very different and involve raising the minimum wage and changing the way tax incentives are provided.
RcouF1uZ4gsC 9y ago
To call benefits that people would have received working at the same wage for any other company a "tax" is kind of pushing the meaning of the word. For example, the student loan deduction only applies if you have an adjusted gross income of less than $80,000 (https://www.irs.gov/publications/p970/ch04.html https://www.irs.gov/publications/p970/ch04.html). Does that mean there is a "tax" that we pay when a company hires a new grad for less than $80,000? In addition, does anyone really believe that if Walmart did not exist, the current Walmart workers would have high paying jobs? However, many of us do pay a "union" tax. Many local governments have significantly higher taxes because of union negotiated pensions and higher benefits. In addition, Americans also paid a "union tax" when we had to bail out GM a company whose union contributed to it's financial failure.
joshuaheard 9y ago
Walmart is doing what any market player in its position would be doing: paying the prevailing wage (in this case the federal minimum wage). This is not a tax, or a subsidy. If you want to blame anyone, blame the government for providing such generous benefits. Since the government is going broke, and Walmart is sustainable, I know where I would start.
- specialist 9y ago
  Government functions independently of those it governs? https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture
MBCook 9y ago
The article says how much an average person pays in taxes, and how much Walmart costs the government (based on their analysis)... but it never said how much the average citizen pays every year in 'Walmart Tax'. That seems like an odd thing to leave out of the article. $1.75? I probably don't care. $432? That's more of a problem. But the article doesn't state it despite it being the headline.
- specialist 9y ago
  Tough to determine. In my state, it is illegal (as in go to jail) to disclose the value of tax breaks, loopholes. The quickest fix to all the parasitic behavior is to daylight how much its costing us.
  - amdavidson 9y ago
    Curious, which state is that?
- maxerickson 9y ago
  There's also the choice of statistic. The article says that the average household (composed or hardworking men and women) pays $13,000 in income taxes. But that is the mean. US income distribution and taxation isn't well summarized by a mean, the typical household pays much less than that in income taxes (and probably receives government transfers that exceed their income taxes).
BrandonMarc 9y ago
So the author invents the term "walmart tax" and describes it's the reality of Walmart workers having to use welfare programs to supplement their income. So there is no "tax", it's a (claimed) consequence of paying employees so little. ... and I see the author is the president of a union.
AJ007 9y ago
Here are some options: - Walmart fires half of their workers and doubles the remainder's pay - The government terminates the benefits low income Americans receive - Walmart accelerates the transition to automated stores and fires any workers who receive government benefits - Walmart doubles all workers pay and increases prices to match, and then closes any stores that fail to turn a profit - Walmart fires everyone, shuts down, and concedes to Amazon
losvedir 9y ago
Doesn't this apply to anyone who pays minimum wage? Is there a Walmart specific aspect I'm missing other than that they're the country's largest employer?
mnm1 9y ago
You either support a higher minimum wage and healthcare for everyone, or you support the Walmart tax. It's really that simple and Walmart is not the only corporation the "Walmart" tax goes to. We already know what our "representatives" support.

I was expecting a discussion of the minimum wage that Walmart lobbies for in order to hurt smaller competitors. Probably expecting too much subtlety.

specialist 9y ago
They also outsource (socialize) their employee's healthcare costs, in a way that other businesses cannot.
djrogers 9y ago
What are you referring to? Walmart already pays employees well above the legal minimum wage, despite the rhetoric thrown about... [1]http://www.cnbc.com/2017/01/27/wal-mart-is-making-it-easier-for-workers-to-earn-those-pay-hikes-.html http://www.cnbc.com/2017/01/27/wal-mart-is-making-it-easier-...

splintercell 9y ago

I never bought this argument that somehow Walmart is abusing the system. Abusing the system implies that only if Walmart stops doing the abuse, somehow abuse will stop, but this clearly is not the case. Contrary to what writers of this article believe, prices are not formed in isolation of buyer and seller, in this case labor is being sold, and if Walmart does not lower the salaries and transfer the savings to the customers then some other company is going to beat the to it and manage to provide the cheapest good for the same quality. Most people believe that when a company does something X, to achieve a reduction in costs, then it simply uses it to increase it's own profit margin, but they don't understand that instead of increasing their current profit margin, they can increase their future profit margin by selling their products for less by passing that lower cost to the customer. Calling it a 'Walmart' tax is a spin on things which is aimed to invoke emotional imagery, it's like if NJ lawmakers called a tax as 'Tesla tax' because by bypassing the dealers they are putting more people out of job and on welfare, therefore the tax which will be used increase the benefits is 'Tesla Tax'. There is a wide welfare structure in America, and the market will reflect that. If you give certain group of people free healthcare, then their employers will stop providing them with healthcare, if they give 3% 401K contribution to all working employees then yes, their employer's contribution will go down by 3%.

the_gastropod 9y ago
> if Walmart does not lower the salaries and transfer the savings to the customers then some other company is going to beat the to it and manage to provide the cheapest good for the same quality This excuse can be used to justify virtually any deplorable behavior by a corporation. "If _we_ don't cut prices by dumping waste directly into the river, another company will!" Costco competes head-to-head with Walmart on prices, and doesn't treat their employees like cattle.
- humanrebar 9y ago
  Paying people less or hiring people getting government benefits is nothing like dumping poison into a water supply.
  - hedora 9y ago
    It is similar to slowly poisoning the water supply when you destroy dozens to hundreds of local mom and pop stores with each supercenter (which leads to decreased life expectancy in the community, due to drug/alcohol abuse, suicide, etc). Anyway, that well-documented boat sailed in the '90s, and now we have Amazon (and I think Amazon deliveries are a net good thing). What really bugs me is that I have to subsidize low wages at walmart. If the US would just switch to guaranteed income or raise the minimum wage, walmart prices would go up something like 1%, but their employees would make at least 33% more. Then my taxes could be used for something useful, like education.
    - jrs95 9y ago
      Those expenses would also be passed on to working class people who are not making much more than the minimum wage, though. Paying for it with taxation is probably better in that regard. Although that could be offset in other ways. Adjustments to EITC and universal child care could make a huge difference for low income people, without having to have a full guaranteed income.
    - specialist 9y ago

woopwoop 9y ago

It seems to me that whether Walmart gains or loses from a welfare benefit paid to workers depends on the structure of the benefit. IANAE. If the benefit is tied to working, like the EITC, it makes the worker willing to work for a lower wage. i.e. the result of the benefit is to shift the supply curve for labor down, so that the equilibrium wage is lower. On the other hand, if the benefit is not tied to working, it seems to me that it shifts the supply curve up. I'm less willing to take a low-paying job once I know I at least won't starve. This means that Walmart pays more. That welfare benefits are means tested complicates things significantly.

adventured 9y ago

First of all, Walmart I'll note consistently pays one of the world's highest corporate income tax rates, at around 30%. Their income tax is about equal to what that article claims the subsidy is. Ok, let's present the alternative then. Walmart automates its massive retail operations substantially over the next 10-15 years, using robotics and AI. Their goal is to match the dollar of sales to employee ratio of, say, beloved Costco. And or try to keep up with Amazon's ability to highly automate its operations (competitive pricing advantages etc). There went one million jobs, consisting largely of employees with few skills and very limited alternative employment prospects. Now what? Here's the reality when you remove the one-sided emotion-driven premise in the article: it's better to subsidize those employees to a modest extent, than to a 100% extent (which is the scenario coming for tax payers; the harder / more expensive you make it on Walmart to employ those people, the faster they're going to automate their jobs away). Also, if you want to reduce the subsidy, raise the minimum wage (or the earned income tax credit, a vastly superior approach; which then begets a further debate on the subsidy), which Walmart has routinely supported. They support it because it harms their weaker competitors, whereas Walmart can deal with it. When you raise the minimum wage, Walmart will either optimize by firing workers / using automation further, or they'll push increased costs onto customers, which gets you right back to the same place in terms of tax payers paying for Walmart's employees (hint: every employed adult in America pays for their employees, they have $485 billion in sales).

gruturo 9y ago
> Ok, let's present the alternative then. >Walmart automates its massive retail operations substantially over the next 10-15 years, using robotics and AI. You're presenting this as an alternative, but this is happening _anyway_ as soon as practically viable. Underpaying workers simply moves this break-even point by some years, it doesn't change anything else and is not an alternative.
mtberatwork 9y ago
> the minimum wage ... which Walmart has routinely supported. Do you have any links for further reading on this? From what I've read, they've only raised their min wage from $9 to $10 after protests by their work force. I certainly wouldn't call this support of raising the minimum wage (but perhaps they've since changed their tune?).

hedora 9y ago

Better writeup: https://americansfortaxfairness.org/files/Taxpayers-and-Walmart-ATF.pdf https://americansfortaxfairness.org/files/Taxpayers-and-Walm...

anothercomment 9y ago

So these people would be better off if they didn't have a job at Walmart?

Thriptic 9y ago

This seems like a pretty straight forward issue to me. If the minimum wage is too low for employees to live on in your state, then raise the minimum wage. Don't get angry with a corporation for complying with wage laws that your state set. It should be pretty unsurprising that a company is seeking to pay minimum wage for unskilled labor. Also if you don't want to offer tax incentives to a corporation then complain to your legislators. I'm pretty sure every company would jump at the opportunity to leverage tax incentives, not just Walmart.

maxerickson 9y ago
You could look at a newspaper column as a way of trying to gain public support for your view, public support that would be useful in getting legislators to act.
- Thriptic 9y ago
  Sure, but they are framing the problem incorrectly which will poorly bound the types of solutions legislators will shoot for. If the problem is framed as "Walmart is abusing the system" then the proposed solutions will probably all be some variant of "punish Walmart". However, the problem is actually that the system (wage laws, tax laws, etc) is poorly serving its constituents, not that Walmart is abusing it. The proposed solutions to this problem look very different and involve raising the minimum wage and changing the way tax incentives are provided.

RcouF1uZ4gsC 9y ago

To call benefits that people would have received working at the same wage for any other company a "tax" is kind of pushing the meaning of the word. For example, the student loan deduction only applies if you have an adjusted gross income of less than $80,000 (https://www.irs.gov/publications/p970/ch04.html https://www.irs.gov/publications/p970/ch04.html). Does that mean there is a "tax" that we pay when a company hires a new grad for less than $80,000? In addition, does anyone really believe that if Walmart did not exist, the current Walmart workers would have high paying jobs? However, many of us do pay a "union" tax. Many local governments have significantly higher taxes because of union negotiated pensions and higher benefits. In addition, Americans also paid a "union tax" when we had to bail out GM a company whose union contributed to it's financial failure.

joshuaheard 9y ago

Walmart is doing what any market player in its position would be doing: paying the prevailing wage (in this case the federal minimum wage). This is not a tax, or a subsidy. If you want to blame anyone, blame the government for providing such generous benefits. Since the government is going broke, and Walmart is sustainable, I know where I would start.

specialist 9y ago
Government functions independently of those it governs? https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture

MBCook 9y ago

The article says how much an average person pays in taxes, and how much Walmart costs the government (based on their analysis)... but it never said how much the average citizen pays every year in 'Walmart Tax'. That seems like an odd thing to leave out of the article. $1.75? I probably don't care. $432? That's more of a problem. But the article doesn't state it despite it being the headline.

specialist 9y ago
Tough to determine. In my state, it is illegal (as in go to jail) to disclose the value of tax breaks, loopholes. The quickest fix to all the parasitic behavior is to daylight how much its costing us.
- amdavidson 9y ago
  Curious, which state is that?
maxerickson 9y ago
There's also the choice of statistic. The article says that the average household (composed or hardworking men and women) pays $13,000 in income taxes. But that is the mean. US income distribution and taxation isn't well summarized by a mean, the typical household pays much less than that in income taxes (and probably receives government transfers that exceed their income taxes).

BrandonMarc 9y ago

So the author invents the term "walmart tax" and describes it's the reality of Walmart workers having to use welfare programs to supplement their income. So there is no "tax", it's a (claimed) consequence of paying employees so little. ... and I see the author is the president of a union.

AJ007 9y ago

Here are some options: - Walmart fires half of their workers and doubles the remainder's pay - The government terminates the benefits low income Americans receive - Walmart accelerates the transition to automated stores and fires any workers who receive government benefits - Walmart doubles all workers pay and increases prices to match, and then closes any stores that fail to turn a profit - Walmart fires everyone, shuts down, and concedes to Amazon

losvedir 9y ago

Doesn't this apply to anyone who pays minimum wage? Is there a Walmart specific aspect I'm missing other than that they're the country's largest employer?

mnm1 9y ago

You either support a higher minimum wage and healthcare for everyone, or you support the Walmart tax. It's really that simple and Walmart is not the only corporation the "Walmart" tax goes to. We already know what our "representatives" support.