Wal-Mart Stores Inc. (Bentonville, Ark.) is reported to have collected well over $1 billion in state and local government subsidies during its decades-long expansion from a regional discount chain to the world’s largest retailer.
The report, compiled by Good Jobs First (Washington, D.C.) and the United Food and Commercial Workers International Union , is scheduled to be released today. Good Jobs First monitors job-subsidy programs.
“We’re not accusing them of doing anything illegal or unusual in the corporate world,” said Philip Mattera, research director of Good Jobs First. But, he said, the report argues that the low wages paid by Wal-Mart and the downward effect that has on wages at other retail operations, its negative effect on small businesses in the communities where it locates and its contribution to urban sprawl and traffic raise serious questions about the value of giving it sizable financial incentives to expand.
Mattera noted that similar complaints have been leveled against other big-box retailers, like Target Stores (Minneapolis) and Kmart Holding Corp. (Troy, Mich.). But, he said, Wal-Mart’s size, profitability and capacity to force other retailers to react to its practices make subsidizing its growth especially questionable.
Greg LeRoy, founder of Good Jobs, said the report bolstered the group’s argument that taxpayer-financed subsidies to giant retailers should be restricted to those expanding into poor neighborhoods where shoppers are underserved.
A Wal-Mart spokeswoman, Mona Williams, said the retailer, which was not provided with a copy of the report, did not know the correct subsidy total. But, she said, if $1 billion is correct, Wal-Mart could make good use of the figure in its advertising. In the last 10 years, she said, Wal-Mart has collected more than $52 billion in sales taxes, paid $4 billion in local property taxes, and paid $192 million in income and unemployment taxes to local governments.
“It looks like offering tax incentives to Wal-Mart is a jackpot investment for local governments,” she said.
Good Jobs said it found published reports of 91 Wal-Mart stores having received tax refunds or credits, job training funds, community investment in roads and other subsidies ranging from $1 million to $12 million. The total was $245 million. In interviews with Good Jobs, local officials provided data indicating that 84 of Wal-Mart’s distribution centers received subsidies averaging $7.4 million, for a total of $624 million. And searches of databases for tax-exempt bonds issued by state and local authorities to provide low-interest financing found that such benefits to Wal-Mart cut $138 million off the cost of developing 69 stores.
“The actual total is certainly far higher but the records are scattered in thousands of places and many subsidies are undisclosed,” the report said.