Class warfare summed up in a simple joke (with an accompanying cartoon)

By the way, I hated posting without anything factual about that story. I still can't find a resolution to the claim by the Wisconsin tax collector, although by now there would have been one. And I don't really know tax law that well, so it's just not my thing.

But the REIT structure that was claimed to be a "tax avoidance strategy" looks to have been common in many states. And around the same time, lots of states were making an issue of it, not just with regard to Walmart, which apparently was once again the easiest target for the tax collector to go publicly with. The REIT structure is made possible by states that require multiple tax returns from corporations with subsidiaries. Every subsidiary files its own return. So you set up a REIT to own your land, and show a bottom line tax of zero dollars. That year, close to 50,000 corporations filed returns in Wisconsin, and 2/3 of them showed a bottom line tax of zero.

That REIT structure wasn't some tax avoidance strategy Walmart thought up. It's a strategy employed by lots of companies in states that require multiple returns. Because this became a huge issue about five years ago, from my reading just now, it looks like many states closed up those "loopholes" by passing combined reporting laws. Common sense tells me that you don't have to modify your tax law if the loophole isn't technically legal. But again, taxes aren't my thing. I will try to figure out what the resolution was with Wisconsin's claim when I have the time today. But if that is the proof of Walmart's misdealings, I am underwhelmed again. Cause once again, how much in taxes does Walmart pay to Wisconsin? And who else was using that strategy that was smaller than Walmart, so wasn't singled out in a newspaper story?

 

OK, just checked my Wall Street Journal archive. It did three extensive stories in February, 2007 about Captive REITS. Wal-Mart was the biggest user of the loophole (in 25 states), but the strategy was used by other retailers, such as Autozone, and apparently financial companies which require physical locations, including AmSouth and Bank of America. I can't speak for how the Walmart thing resolved itself in Wisconsin. But it was a legal strategy in all of those states, and the states got wise to it, and most closed what was a complicated tax loophole. Walmart, because of its size and the fact that it is a location-based business was saving a fortune in taxes because of the strategy. If you added up all of the states it could use that strategy in, it was close to $100 million a year. But none of those states (except possibly North Carolina; I am not sure without doing way too much digging for this) tried to make a claim against Walmart for back taxes, except Wisconsin. And Wisconsin changed its law, which is a tacit admission that the strategy was at least technically legal, because you don't have to amend your tax code to prohibit something that is legal. I don't know how the claim of $17 million was resolved in Wisconsin. But I have someone now who will probably know, and I can ask later today.

I just wasted a lot of time on this, but it's why I really prefer to know a whole picture and know what is behind something like that, rather than reading a Milwaukee newspaper story with a claim from the tax collector and then make a determination.

But my posts on this were obviously much more of a pain, obviously, than just reading the headline and concluding that Wal-Mart is a tax evader.

 

Huh? That was 2009. We were mired in a recession in 2009. I am 100 percent certain that Bank of America lost money in 2009.

If you have negative income, do you pay income tax?

No research necessary on that.

Probably best to avoid posting your links from "Main Street Movement — a coalition of students, the retired, union workers, public employees, and other middle class Americans," or at least trying to determine its motivation first. ... and then using common sense rather than knee-jerk populism.

 

I can go one by one, if it is really necessary. Essentially two different reasons. The financial services companies lost money in 2009. GE lost $408 million from its U.S. operations in 2009, mostly because of GE Capital. It paid taxes to other countries. Bank of America, Wells Fargo and Citigroup lost money in 2009. No need to look that up. As a side note, they also benefited from tax breaks during that period, in addition to the bailouts that the Federal Government gave them. I suggest calling your Congressman. Because his cronies arranged for that. Paid off by lobbyists. It's the same shit your progressive website tries to get for its various constituents -- and those causes do, actually, when they have the ability sell votes, something you can harvest with websites like those.

ExxonMobile? Paid roughly $15 BILLION in taxes. Subsidiaries in the Bahamas, Bermuda and the Cayman Islands that legally shelter the cash flow from operations in places like of Angola, Azerbaijan and Abu Dhabi. People may not like it. But it's a global corporation and the U.S. has no jurisdiction over the money it can shelter. The year before it paid something like $40 billion in taxes, a large percentage of its profits. Again, not to the U.S. The irony here is that if the U.S. tax system made it as relatively easy to operate, they'd locate those operations here instead of elsewhere. The U.S. chases the tax revenue away, in effect, and then people get up in arms about the fact that they aren't collecting taxes from those companies.

By the way, you started with Bank of America. And this whole thing is colossal shift from the discussion about Wal-Mart. But I can follow the goalposts.

And I am not defending the U.S. tax code or the fact that GE or ExxonMobile (those other companies had no legit earnings to tax that particular year, but do most every other year) can obviously derive income from the U.S. and not pay taxes. I'd scrap the whole code, simplify and try to competitively lure that tax money here instead of other countries. Just as I'd scrap the union protections and all the other pay for play bullshit.

 

They are not "loopholes and clever accounting," though. It doesn't take a very clever accountant to 1) Make a company that lost money not pay taxes (those financial services firms), 2) Take a Federal subsidy they lobbied Congress for, and Congress GAVE to them, to the extent any of those companies got any, or 3) Locate the operations of their global companies anywhere in the world.

The companies that had profits actually paid taxes. The U.S. could have some of that tax revenue instead of 0. The U.S. drives that tax revenue away.

And then it is "loopholes and clever accounting" that is to blame. Those loopholes and clever accounting = the tax code lorded over by the guy you elected. It's a mess compared to anywhere else in the world, including the Western European countries that tax the shit out of their people.

 

I know. We have been in agreement.

Again, it's the populism that always makes me so strident.

Those companies are acting in accordance to the incentives we give them. But immediately it's a "clever accounting and loopholes" in both your's and secretariats post, with the implication that they are tax cheats. If that isn't the implication, why was the original post about those companies and not our elected officials?

No one wants to pay taxes. I am sure someone will jump on with the requisite, "I want to pay my 'fair share'" now. But that's just not most people. And certainly not the people who pay most of the taxes. The vast majority of people subject to any amount of taxation -- let alone companies that earn way more than individuals, and are under pressure from shareholders to maximize profits -- try to knock down their tax bill as much as possible.