Thursday, August 30, 2007
 
Obeying Tax Laws Not Fair, Say Tax Money Spenders
In Wisconsin, the state is going after Wal-Mart for using legal techniques to lower its tax obligations: Wal-Mart owes back taxes, state says: Paying rent to itself cuts millions off retailer's tax bill:
    Wal-Mart Stores Inc. has avoided millions of dollars in state taxes by paying rent on 87 Wisconsin properties in a way that the state Department of Revenue calls an "abuse and distortion of income."

    As a result, state tax auditors say, Wal-Mart owes more than $17.7 million in back corporate income taxes, interest and penalties for 1998, 1999 and 2000. More could be due for later years.
The cause for this? The state is imposing its own standard:
    Revenue Department lawyer Mark Zimmer argues that the world's largest retailer is not paying its fair share of taxes that support public schools, local police and fire departments and the highways it uses to transport what it sells in Wisconsin. [Emphasis added]
Essentially, Wal-Mart is setting up its own entity to own the land that it uses for its stores; Corporate Wal-Mart gets to deduct the rent from its gross income so that its taxable income subject to taxation is less. Then, Landlord Wal-Mart pays Corporate Wal-Mart the profits as dividends, which are taxed less than the same amount as straight income would have been taxed.

Two distinct companies with different ownership wouldn't draw the ire of the tax seekers; that it is, and it's Wal-Mart, makes it look like easy pickings for the state of Wisconsin.

Hopefully, Wal-Mart and its REIT will prevail. A fie upon "creative" unelected officials who think their position gives them license to determine when "legal" isn't "fair" and to use the people's resources to extract more resources from the people.


- posted by Brian J. @ 12:03 PM
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