Wal-Mart's Tax-Dodging Schemes Exposed

Today's Wall Street Journal reports on Wal-Mart's aggressive tax dodging schemes that have enabled the company to pay corporate taxes at half the average state rate for the last decade. These complex tax schemes have attracted the attention of state legislatures around the country, and they're at the heart of a North Carolina lawsuit challenging Wal-Mart's abusive tax shelters. Documents from the North Carolina lawsuit, obtained by the Wall Street Journal, expose Wal-Mart's systematic and legally-questionable attempts to pad its bottom line at the expense of individual state taxpayers.

Excerpts and the full story are below.

* "At least one gathering, according to an internal Ernst & Young calendar, took place in Wal-Mart's headquarters in the 'Tax Shelter Room.'"

* "In 2002, for example, the accounting firm delivered a 37-page proposal laying out a smorgasbord of 27 potential tax strategies, most tailored to a particular state's tax code. It described one of them as 'a very aggressive strategy with considerable risk.'"

* "One of the proposals was accompanied by the following warning: 'Note that in a 'post-Enron' environment and amidst the focus on 'tax haven' operations, this strategy is expected to get more scrutiny by the IRS, as well as some states.'"

* "David Bullington, Wal-Mart's vice president for tax policy, said in a deposition that he began feeling pressure to lower the company's effective tax rate after the current chief financial officer, Thomas Schoewe, was hired in 2000. Mr. Schoewe was familiar with 'some very sophisticated and aggressive tax planning,' Mr. Bullington said, according to a transcript of the deposition, taken by the North Carolina attorney general's office in July. 'And he ride herds on us all the time that we have the world's highest tax rate of any major company.'"

Few journalists warned of the danger to the borrowers who are now facing foreclosures by the tens of thousands. The regulators and ratings agencies and commissars of business ethics were silent. The media pumped up the myth of a buouyant economy rather than expose the scams that would in a few short years unravel the markets and deepen inequality.

Writes Holly Sklar: “Until 2005, multimillionaires could still make the Forbes list of the 400 richest Americans. In 2006, the Forbes 400 went billionaires only. When the Forbes 400 began in 1982, it was dominated by oil and manufacturing fortunes. Today, says Forbes, “Wall Street is king.”

And what are the consequences? She writes: “The 25th anniversary of the Forbes 400 isn’t party time for America. We have a record 482 billionaires — and record foreclosures.

We have a record 482 billionaires — and a record 47 million people without any health insurance.

Since 2000, we have added 184 billionaires — and 5 million more people living below the poverty line.”

This superbug of greed went largely undetected by the TV channels and business news outlets. Now, as a crisis ripens with parallels to 1929 on the lips of sober pundits, we have a new superbug on the horizon: the superbug of mindless “news” designed to divert our attention from what is really happening

In the guise of reporting on business, we have Fox’s new fusion of porn and partriotism pumped out by a bimbocracy of chatter and well-calculated false optimism as Jim Nocera observed in the New York Times.

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When Karen Armatrout died in 1997, her employer, Wal-Mart, collected thousands of dollars on a life insurance policy the retail giant had taken out without telling her, according to a lawsuit filed in U.S. District Court.

Armatrout was one of about 350,000 employees Wal-Mart secretly insured nationwide, said Texas attorney Michael D. Myers, who estimated the company collected on 75 to 100 policies involving Florida employees who died.

Myers is seeking to make the Armatrout lawsuit a class-action case on behalf of the estates of all the Florida employees who died while unwittingly insured by Wal-Mart."