Thursday, October 25, 2007

Speaking of Wal-Mart and Avoiding Taxes

Michael talks about how Wal-Mart has played the transfer pricing manipulation game to reduce its state income taxes. But this is small potatoes when compared to the Federal tax reduction game.

AB readers know that I have had lots of posts on this topic – often giving huge hat tips to Max Sawicky. Here I document the drop in Wal-Mart’s overall effective tax rate. Here I note how part of this play relates to how they source goods from China. As I note – none of this is rocket science so one has to wonder why the tax authorities are not doing a better job at enforcing arm’s length pricing under section 482.


J.Goodwin said...

Tangentially, Walmart is probably one of the larger causes of sales tax revenue as well.

I know plenty of people who head north across the border to New Hampshire to buy electronics etc at Walmart, then don't declare the purchase as part of their use tax. Of course, states rarely attempt to enforce use tax for individuals. The biggest target is retailers and construction companies.

Robert D Feinman said...

You may be interested in this article about how Walmart has been supporting politicians in states where it is fighting local taxes.

Wal-Mart Courts State Politicos

You may also be interested in visiting our group blog devoted to Walmart:

The Writing on the Wal