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Saturday, October 22, 2016

Low-income families weren’t the only ones hurt by cuts to food stamps last fall. Top Walmart executives also took a hit.

The cutbacks ate into the discount giant’s sales because so many of its low-income customers rely on this public assistance program to help pay for their groceries. And that made it tough for the company’s top brass to meet their bonus targets.

But that wave of anxiety didn’t last long. Walmart’s board simply rejiggered bonus criteria so that executives could still reap “performance” payouts, The New York Times reported.

Why are most corporate boards determined to maintain sky-high pay for executives even when they perform poorly? The most common explanation is that board members are often overpaid corporate leaders themselves. The last thing they want to do is provoke scrutiny of their own fat paychecks.

Another, lesser-known, reason is that corporations actually have a perverse incentive for overpaying top-level executives. This is due to a tax loophole that allows corporations to deduct unlimited amounts from their federal income taxes for the cost of so-called “performance pay” for executives. The more corporations pay top officers, the less they pay Uncle Sam.

Guess who makes up the difference? Taxpayers.

new report we co-authored for the Institute for Policy Studies and Americans for Tax Fairness calculates just how much this bonus loophole benefits Walmart. For example, we found that Mike Duke, the big-box retailer’s recently retired CEO, pocketed nearly $116 million in exercised stock options and other “performance pay” between 2009 and 2014. That translates into a taxpayer subsidy for Walmart of more than $40 million.

By lowering the performance bar for Walmart’s executives, the company’s board has kept the bosses happy and secured a nice big tax break. Consider the tradeoff here: This $40 million subsidy could have covered the average cost of food stamps for 4,200 people over that six-year period.

Congress should end this subsidy for bonuses at the top of Walmart and other publicly held U.S. corporations, which costs $50 billion over 10 years, by simply eliminating the “performance pay” loophole.

Meanwhile, the government is continuing to gut food stamp benefits. As part of a Farm Bill compromise this year, lawmakers agreed to reduce the program’s benefits by an average of $90 a month for 850,000 families.

Walmart’s low-wage workers are likely to be among those affected. Near-poverty wages and part-time schedules have forced the company’s own employees to rely on $6.2 billion worth of food stamps and other taxpayer-funded benefits per year, Americans for Tax Fairness estimates.

For a company that hauled in $16 billion in profits last year, this is shameful.

Walmart’s workers are speaking out more than ever before. In the past two years, about 1,000 Walmart stores have faced strikes or rallies for better pay and working conditions. In January 2014, the National Labor Relations Board charged the corporation with illegally disciplining and firing workers who participated in these actions.

Barbara Collins, a single mother from Placerville, California, wrote in Salon about her decision to join strike actions after struggling for years to make ends meet while earning $12.05 an hour as a Walmart stocker. For years, she was never guaranteed a 40-hour workweek. During some weeks she worked as few as eight hours. Following a confrontation with a Walmart board member about the company’s poor pay and working conditions, she got fired.

Despite the intimidation, Walmart workers and their allies are organizing a new round of strikes that began before the corporation’s June 6 annual shareholder meeting

Taxpayers should support these workers by demanding an end to subsidies for Walmart’s inexcusable pay practices — at both the bottom and the top.

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies, and Frank Clemente is the executive director of Americans for Tax Fairness. They wroteTaxpayers Subsidize Walmart Execs, a new report.

Cross-posted from Other Words

Photo: Ron Dauphin via Flickr

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  • stevev

    So these guys want to start double taxing personal pay. Tax it once as corporate profit and then tax it again as personal income. That is a rather slippery slope to start down.

    • Eleanore Whitaker

      Or, we taxpayers could cut off ALL tax subsidies to businesses and see how well they do on their own without help from us…That be what you have in mind? As I recall, the sole purpose of collection of taxes had zero to do with keeping businesses in existence. The collection of taxes were for the use of infrastructure, defense and programs that would keep our most vulnerable from death’s door. Not, as some believe, to take tens of billions EVERY year and hand it to corporations who believe a $10.6 billion salary is a mere bag of shells. They can learn to do the very thing they demand the rest of us within their means. Excess among the wealthiest is increasing poverty of the rest of us.

      • stevev

        I definitely want to stop tax subsidies to for-profit businesses. The authors, IMHO, defined the lack of double taxation as a tax subsidy. If employee pay starts being taxed as the corporation’s profit as well as personal income tax, the incentives to reduce or remove the employee cost will increase dramatically. The high-earners will be unaffected because of the golden rule (he who has the gold makes the rules).

        • Eleanore Whitaker

          When a business owner chooses to start a business, does he have the right to expect help from his employees as taxpayers too? Employee costs today are minimal. Employers no longer contribute to most 401Ks and traditional retirement pensions have disappeared thanks to Wall Street’s influence. This puts employees in double jeopardy. If their employer mismanages the company, their salaries stagnate and they are less able to contribute to their retirement plans. Healtcare isn’t an employer cost anymore thanks to healthcare reform. Most employees today prefer to opt out of their employer’s plan due to the outrageous copays and premiums. (I was an office manager and administered the Aetna plan). The entire basis is that American tax dollars are not intended to help business. The Constitution is clear on the use of tax dollars paid. I’m fed up with the whining of employers in the US. They use the roads, bridges and tunnels one hundred times more than any individual American. Taxpayers should not be burdened with the cost of damage from drilling spills, torn up highways and bridges in addition to handing these businesses tens of billions they don’t need. If you use the infrastructure more, you pay more.

          • idamag

            When we subsidize business and allow such unfair labor practices, it is not a free market.

    • awakenaustin

      Corporate profits aren’t anyone’s personal pay. Corporate profits are the difference between the corporation’s costs and its gross income.
      The personal pay of its employees including its executives is part of its costs.
      They reduce their profits by increasing their costs, in this case paying “performance” bonuses and they receive a tax benefit. Removing that tax credit/subsidy is not taxing profits.
      The failure to receive a credit, subsidy or even a deduction is not a tax, despite the fact that some would pretend that it is.

      • JPHALL

        Isn’t it funny that they always justify their business practices (taxes, wages, benefits) on market forces. Yet they insist on subsidies and tax breaks for themselves. Big government is bad, but that government must keep giving them tax breaks and subsidies.

  • 788eddie

    I like the idea of the Waltons paying their fair share of taxes. Then Maybe we, as a country, can afford to fix some of the infrastructure they use to make their money.

  • halslater

    Why shop at WalMart at all? They are institutionally corrupt. It is in their business model and DNA. I recently helped a company fight them off in a blatant, open patent infringement. They just sent my client’s product to China and asked for a knock-off. They are an absolutely gross company with a confusing floor plan.

    • idamag

      My sentiments, exactly. I do not shop at Walmart. I might have to pay a little bit more, but I can look the checkers at Albertsons, Smiths, or Fred Meyers in the eye, because they didn’t have to go without to help pay for my purchases..

      • Dominick Vila

        You are right. The worst part about WalMart is the way they abuse their employees.

  • Eleanore Whitaker

    In reality, Walmart is becoming another plantation mentality version of “the company store” we all recall in the mining states. These company stores paid miners outrageously low wages and then demanded they buy their necessities at the “company store.”

    Our tax dollars are not intended to keep businesses in existence. That’s THEIR responsibility. Yet, every year, the GOP insists upon jacking the amount of tax subsidies passed to the Biggest and most profitable businesses in the US. This has to stop. That’s not what our tax dollars are for.

    • idamag

      Actually, many mine owners paid their workers in script that was only good at the company store.

  • Eleanore Whitaker

    Employees are also taxpayers. Every pay period, the IRS deducts federal and state taxes from these Walmart employees paychecks. In effect, Walmart pays salaries barely above minimum, Walmart employees pay federal and state taxes so Walmart’s thousands of fleets of trucks can get a freebie on our roads, tunnels and bridges. Then, they have to file for welfare, a federal program all of us pay for through our taxes. Every time a Walmart moves into a town, hundreds of small businesses go belly up.

    Check your local tax rate. You pay higher local property taxes when a Walmart moves into your town. Worse, the local utilities all give Walmart a discount that’s recouped by raising your utility rates.

    In my town, a small business owner pays $17 per sq. ft in local taxes. The two Walmarts that just moved in? $11 sq. ft. Guess who will make up that loss of all those small businesses Walmart shoved out of town?

    • idamag

      I went into a local teacher supply store a while back. The lady, who owns the store, told me she pays a hefty tax while Walmart pays none. This becomes unfair competition to the independent business owners.

    • old_blu

      You are absolutely right Walmart gives their employee’s such a discount on their purchases that the money they do make they spend right back in the same store, I have a friend who’s wife works there and he does his banking there and all of his shopping. My point is that they are not giving that much back to the community that they’ve ruined when they moved into it.

  • ExRadioGuy15

    Gee, I thought these Fascist GOPers didn’t like welfare? Oh, wait…I forgot that wealthy and corporate welfare are just fine with them (aka, upward wealth redistribution)….my bad

    • jmprint

      They don’t call in welfare, they call the grants and tax breaks.

    • idamag

      It depends on whose hands the money goes into.