Going After Tax Evaders is a New Tax Increase: WMC

Last night I had a opportunity to hear Jack Norman, Research Director of the Institute for Wisconsin's Future speak about Wal-Mart and its use of loopholes to legally avoid paying taxes.

I started to wonder. Imagine that Wisconsin took steps to change the state law so that Wal-Mart would have to pay the taxes.

Would Wisconsin Manufacturers and Commerce (WMC) consider remedial legislation to fix the problem an amendment of the existing tax laws or would they consider that a new tax and/or a tax hike?

If anyone can get near to this august body that prides itself on patriotism and loving the state of Wisconsin, please put the question to them.

Here, from Broken Partnership: How Wisconsin’s Corporate Sector Underpays State and Local Taxes by $1 Billion is what Wal-Mart does to avoid the taxes.

Wal-Mart has a separate corporation that owns the real estate. Wal-Mart makes sure that the rent is high enough so that the stores never make a profit. Of course, the real estate holding trust that owns the land and building make a lot of money - like several hundred million dollars.

...The Wal-Mart operation that owned the stores collects rent is set up as what is known as a real-estate investment trust (REIT).

The REIT's profits, paid out in dividends to Wal-Mart are tax-free.

That is because the REIT is located in a state that does not tax the profits from rents. Very nifty. Figure out a way of showing no profit in Wisconsin and move the income in the form of a rent to another state.

Wal-Mart and WMC do not hate all lawyers. They must love the ones who figured out these tax loopholes.

Look into your pockets. Not a lot there?

That's OK. Wal-Mart and WMC wish to thank you for paying additional taxes since someone has to make up for their clever tricks.

Remember, if you support fixing this problem you are a supporter of big government who just wants to raise taxes.

Remember the WMC motto: Standing Up for Business! If it is good for WMC, it is good for you!

Comments

[Henry Dubb]

It seems to me calling it a loop hole is a tad dishonest. These so called "loop holes" were explicit attempts to get businesses to locate to Wisconsin. Under Thompson, then Doyle.

Selective Reporting is a process where corporations can divert their profits to low tax states. This not only involves Wal-Mart but many corporations in the state.

http://proletariat.wordpress.com/2007/05/03/capitalist-crooks/

The so called loop hole is a very deliberate process of reducing the corporate tax rate. When you add this to all the corporate welfare Doyle had engaged in, it is shameful indeed.

WMC is right that this is technically a tax increase. But so were the rise of local and school property taxes to fund these corporate kick backs. Its not an issue of an increase or decrease, but for whom and is it fair. Call me old school, but to me corporations are public trusts and through both the Thompson and Doyle administrations in cahoots with corporations that trust has been violated.

[antpoppa]

Corporate Social Responsibility .
Does a corporation or an organization show any regard for it's impact on community, employees, environment . Is this a statutory concern? Can we legislate moral obligation?
I'm certain that a Capitalistic Corporation's basic survival is profit. Morality, is not a state issue, (unless you are a fundamentalist). Perhaps, the charter of a corporation or organization should be redefined. But, how to do this in a global market ? Everything would be in litigation.
Might be easier to change the economic system.

[Sue G]

Wisconsin still doesn't have an enormous commercial and industrial tax base compared to nearby states. If tax breaks aren't enough to get things moving, perhaps other means should be found. Surely the Legislative Research Bureau can find out what's working elsewhere and draft the best possible legislation so Wisconsin benefits, not just the Wal-Marts of the world.

Meanwhile, I have faith in our great University system, and I think concentrating on the technology development capabilities of our institutions will ultimately provide the greatest benefit--unless somebody knows what the next revolutionary thing will be and can help our economy prepare for that. The system-wide equivalent of WARF gave a research grant in chemistry at UW-EC this year that's a sign of things to come, and I hope to see more of that.

[Tim M.]

"Morality is not a state issue"???? Laws re: prostitution, gambling, gaming, etc.; tax breaks for: charitable contributions, environmental contribution, etc.

We legislate morality in every session of every legislature in the nation.

[antpoppa]

Yes Tim, the State does sponsor morality.

Yes, the state does promote and legislate morality, but only as a social control. It creates fear and demoralization, fractionalizes the undereducated and drives them into the arms of the state. State morality leads to violence and attacks positive social structure. It keeps political power static by endorsing a social structure of fear and diverts rebellious energy.
Thank you brother, for reminding me.