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Nathan Newman on June 28, 2007 - 7:29am
When the Wall Street Journal revealed that Wal-Mart was using investment vehicles, Real Estate Investment Trusts, to "rent" property to itself and evade billions of dollars in taxes, it sparked outrage in statehouses across the country.
On the legislative front, New York and West Virginia joined eighteen other states in enacting combined reporting, a requirement that corporations file a joint tax return for all subsidiaries in a state to prevent the Wal-Mart kind of tax avoidance schemes. Other states still in session like North Carolina are debating introducing combined reporting as well.
However, legislators in states like New Mexico that have finished their sessions are still pushing to stop the Wal-Mart tax abuse. The top leadership of both legislative chambers and nineteen of their colleagues have signed onto a letter asking their governor to investigate Wal-Mart and shut down the tax loophole administratively:
"We urge you to exercise your authority to investigate Wal-Mart’s tax record in New Mexico. If Wal-Mart has used the captive REIT structure to avoid state income taxes, the state has the power and duty to make Wal-Mart return this money and pay what it owes."
The reason states need such investigations is that in almost all states, companies don't have to publicly report how much corporate income tax they are paying. An exception is Wisconsin, where records show that Wal-Mart paid only $3 million in taxes on an estimated $852 million in Wisconsin profits between 2000 and 2003, a tax rate of only 0.35 percent.
In related action, Maine's Governor John Baldacci signed the Informed Growth Act, LD 1810, the first law in the nation to require an economic impact analysis of big-box retail stores to assure that tax and other benefits generated by such stores balance out any subsidies or other tax subsidies used by companies building them.