For years, large corporations have whined that US corporate income taxes are “the highest in the world.” While it’s true that our maximum corporate tax RATE is the highest in the world, the EFFECTIVE tax rate paid by US-based multinational corporations is much, much lower.
In fact, as a percentage of GDP, US corporations pay the second lowest taxes in the developed world! And that doesn’t even include the many ways US taxpayers subsidize large corporations through the creation of specialized infrastructure, tax incentives, relocation incentives, government research grants and sweetheart rates on loans.
Those are just the direct subsidies. Indirect subsidies are often even more costly!
Consider the study recently released by Congressional Democrats which found that a single Walmart Supercenter in Wisconsin could cost taxpayers up to $900,000 a year as a result of Walmart’s notoriously low wages and minimal benefits. According to the study, most of Walmart’s employees qualify for food stamps, Medicaid, low-income housing assistance, energy assistance, and other forms of public assistance.
The authors of the study summarize the findings this way, “When low wages leave Walmart workers unable to afford the necessities of life, taxpayers pick up the tab.”
Of course, Walmart responds by saying that its policies benefit all Americans through lower prices. But Costco, another big box chain that competes with Walmart, offers low prices. It also offers full benefits to its employees and pays them an average annual salary of $45,000. There are millions of Americans like myself who try to never set foot in a Walmart store. So why should we be forced to subsidize Walmart’s bad behavior? What is the benefit to us?
There are approximately 4,000 Walmart stores in the US. If each of those cost taxpayers $900,000 a year, Walmart is costing US taxpayers a total of more than $3.6 billion per year!
And that doesn’t include other indirect costs such as the company’s impact on the environment, the impact on independent small businesses that are forced to compete with Walmart, lost revenue in personal income taxes from those forced to accept Walmart’s low wages…the costs are many. There’s also a moral and ethical cost created by Walmart relying on sweatshops in undeveloped countries like Bangladesh.
Meanwhile, the Walton family that owns Walmart enjoys undeserved profits through taxpayer subsidies. For 2011, the company’s net income was $15.4 billion.
Walmart is not alone in unfairly profiting from subsidies and loopholes. A recent study found that 18 of America’s largest corporations, including Abbott, Apple, Citigroup, GE, Google, IBM, Johnson & Johnson, Merck, Microsoft, Nike and Pfizer, have stashed profits in off-shore tax shelters in order to avoid paying $92 billion in US income taxes!
We should demand more of corporations. We should demand that they pay all of the costs associated with doing business. We should stop the subsidies. We should require that they pay employees a living wage. And we should require them to pay their fair share of taxes.