
The Walmart Tax Every American Taxpayer Pays - frgtpsswrdlame
https://www.usatoday.com/story/opinion/2017/04/08/walmart-tax-every-american-taxpayer-pays/100188002/#
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splintercell
I never bought this argument that somehow Walmart is abusing the system.

Abusing the system implies that only if Walmart stops doing the abuse, somehow
abuse will stop, but this clearly is not the case.

Contrary to what writers of this article believe, prices are not formed in
isolation of buyer and seller, in this case labor is being sold, and if
Walmart does not lower the salaries and transfer the savings to the customers
then some other company is going to beat the to it and manage to provide the
cheapest good for the same quality.

Most people believe that when a company does something X, to achieve a
reduction in costs, then it simply uses it to increase it's own profit margin,
but they don't understand that instead of increasing their current profit
margin, they can increase their future profit margin by selling their products
for less by passing that lower cost to the customer.

Calling it a 'Walmart' tax is a spin on things which is aimed to invoke
emotional imagery, it's like if NJ lawmakers called a tax as 'Tesla tax'
because by bypassing the dealers they are putting more people out of job and
on welfare, therefore the tax which will be used increase the benefits is
'Tesla Tax'.

There is a wide welfare structure in America, and the market will reflect
that. If you give certain group of people free healthcare, then their
employers will stop providing them with healthcare, if they give 3% 401K
contribution to all working employees then yes, their employer's contribution
will go down by 3%.

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the_gastropod
> if Walmart does not lower the salaries and transfer the savings to the
> customers then some other company is going to beat the to it and manage to
> provide the cheapest good for the same quality

This excuse can be used to justify virtually any deplorable behavior by a
corporation. "If _we_ don't cut prices by dumping waste directly into the
river, another company will!" Costco competes head-to-head with Walmart on
prices, and doesn't treat their employees like cattle.

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jrs95
I think it's more about ensuring that the system is structured in such a way
that these things are minimized. If you don't want waste dumped in the river,
ban it or tax it rather than subsidizing it. The Costco comparison is a bit
apples to oranges, too. They have a substantially different customer base.
There are a lot of people who can't afford that $110 membership. Lower income
Americans are the ones who benefit the most from WalMart's services. Aldi is
more competitive in this area, but they do it by significantly different
means, and they're still focused on maintaining a very low labor cost, they
just do it differently than WalMart does.

And as someone who worked at WalMart for awhile, their lack of a union (Meijer
and Kroger both required I have full weekend availability as a result of their
union contract -- and I needed weekends free for my job at McDonald's) and the
relative ease of being able to get a job there was a huge part in my own
escape from poverty.

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the_gastropod
I totally agree. I don't think wanting to improve the system and being
critical of corporations exploiting the current system are mutually exclusive.
You can have both.

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Thriptic
This seems like a pretty straight forward issue to me. If the minimum wage is
too low for employees to live on in your state, then raise the minimum wage.
Don't get angry with a corporation for complying with wage laws that your
state set. It should be pretty unsurprising that a company is seeking to pay
minimum wage for unskilled labor. Also if you don't want to offer tax
incentives to a corporation then complain to your legislators. I'm pretty sure
every company would jump at the opportunity to leverage tax incentives, not
just Walmart.

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maxerickson
You could look at a newspaper column as a way of trying to gain public support
for your view, public support that would be useful in getting legislators to
act.

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Thriptic
Sure, but they are framing the problem incorrectly which will poorly bound the
types of solutions legislators will shoot for. If the problem is framed as
"Walmart is abusing the system" then the proposed solutions will probably all
be some variant of "punish Walmart". However, the problem is actually that the
system (wage laws, tax laws, etc) is poorly serving its constituents, not that
Walmart is abusing it. The proposed solutions to this problem look very
different and involve raising the minimum wage and changing the way tax
incentives are provided.

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woopwoop
It seems to me that whether Walmart gains or loses from a welfare benefit paid
to workers depends on the structure of the benefit. IANAE. If the benefit is
tied to working, like the EITC, it makes the worker willing to work for a
lower wage. i.e. the result of the benefit is to shift the supply curve for
labor down, so that the equilibrium wage is lower. On the other hand, if the
benefit is not tied to working, it seems to me that it shifts the supply curve
up. I'm less willing to take a low-paying job once I know I at least won't
starve. This means that Walmart pays more.

That welfare benefits are means tested complicates things significantly.

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AJ007
Here are some options:

\- Walmart fires half of their workers and doubles the remainder's pay

\- The government terminates the benefits low income Americans receive

\- Walmart accelerates the transition to automated stores and fires any
workers who receive government benefits

\- Walmart doubles all workers pay and increases prices to match, and then
closes any stores that fail to turn a profit

\- Walmart fires everyone, shuts down, and concedes to Amazon

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adventured
First of all, Walmart I'll note consistently pays one of the world's highest
corporate income tax rates, at around 30%. Their income tax is about equal to
what that article claims the subsidy is.

Ok, let's present the alternative then.

Walmart automates its massive retail operations substantially over the next
10-15 years, using robotics and AI.

Their goal is to match the dollar of sales to employee ratio of, say, beloved
Costco. And or try to keep up with Amazon's ability to highly automate its
operations (competitive pricing advantages etc).

There went one million jobs, consisting largely of employees with few skills
and very limited alternative employment prospects.

Now what? Here's the reality when you remove the one-sided emotion-driven
premise in the article: it's better to subsidize those employees to a modest
extent, than to a 100% extent (which is the scenario coming for tax payers;
the harder / more expensive you make it on Walmart to employ those people, the
faster they're going to automate their jobs away).

Also, if you want to reduce the subsidy, raise the minimum wage (or the earned
income tax credit, a vastly superior approach; which then begets a further
debate on the subsidy), which Walmart has routinely supported. They support it
because it harms their weaker competitors, whereas Walmart can deal with it.
When you raise the minimum wage, Walmart will either optimize by firing
workers / using automation further, or they'll push increased costs onto
customers, which gets you right back to the same place in terms of tax payers
paying for Walmart's employees (hint: every employed adult in America pays for
their employees, they have $485 billion in sales).

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mtberatwork
> the minimum wage ... which Walmart has routinely supported.

Do you have any links for further reading on this? From what I've read,
they've only raised their min wage from $9 to $10 _after_ protests by their
work force. I certainly wouldn't call this support of raising the minimum wage
(but perhaps they've since changed their tune?).

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cpwright
The federal minimum wage is only $7.25. By paying $10, they are paying 38%
more than the minimum. Even at 9 they are 24% above the minimum. I expect that
they would prefer a minimum wage exactly equal to what they pay as a minimum,
because that would disadvantage less efficient competitors.

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dragonwriter
> I expect that they would prefer a minimum wage exactly equal to what they
> pay as a minimum, because that would disadvantage less efficient
> competitors.

No, it would disadvantage competitors that could get by with labor with lower
market value per unit of labor, which are not necessarily less efficient (if
they were delivering the same output per unit of labor using less expensive
labor, they'd be _more_ efficient, for example, not less.)

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fedups
I was expecting a discussion of the minimum wage that Walmart lobbies for in
order to hurt smaller competitors. Probably expecting too much subtlety.

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djrogers
What are you referring to? Walmart already pays employees well above the legal
minimum wage, despite the rhetoric thrown about...

[1][http://www.cnbc.com/2017/01/27/wal-mart-is-making-it-
easier-...](http://www.cnbc.com/2017/01/27/wal-mart-is-making-it-easier-for-
workers-to-earn-those-pay-hikes-.html)

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RcouF1uZ4gsC
To call benefits that people would have received working at the same wage for
any other company a "tax" is kind of pushing the meaning of the word. For
example, the student loan deduction only applies if you have an adjusted gross
income of less than $80,000
([https://www.irs.gov/publications/p970/ch04.html](https://www.irs.gov/publications/p970/ch04.html)).
Does that mean there is a "tax" that we pay when a company hires a new grad
for less than $80,000? In addition, does anyone really believe that if Walmart
did not exist, the current Walmart workers would have high paying jobs?

However, many of us do pay a "union" tax. Many local governments have
significantly higher taxes because of union negotiated pensions and higher
benefits. In addition, Americans also paid a "union tax" when we had to bail
out GM a company whose union contributed to it's financial failure.

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BrandonMarc
So the author invents the term "walmart tax" and describes it's the reality of
Walmart workers having to use welfare programs to supplement their income. So
there is no "tax", it's a (claimed) consequence of paying employees so little.

... and I see the author is the president of a union.

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hedora
Better writeup:

[https://americansfortaxfairness.org/files/Taxpayers-and-
Walm...](https://americansfortaxfairness.org/files/Taxpayers-and-Walmart-
ATF.pdf)

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MBCook
The article says how much an average person pays in taxes, and how much
Walmart costs the government (based on their analysis)... but it never said
how much the average citizen pays every year in 'Walmart Tax'. That seems like
an odd thing to leave out of the article.

$1.75? I probably don't care. $432? That's more of a problem.

But the article doesn't state it despite it being the headline.

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specialist
Tough to determine. In my state, it is illegal (as in go to jail) to disclose
the value of tax breaks, loopholes.

The quickest fix to all the parasitic behavior is to daylight how much its
costing us.

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amdavidson
Curious, which state is that?

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joshuaheard
Walmart is doing what any market player in its position would be doing: paying
the prevailing wage (in this case the federal minimum wage). This is not a
tax, or a subsidy. If you want to blame anyone, blame the government for
providing such generous benefits. Since the government is going broke, and
Walmart is sustainable, I know where I would start.

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specialist
Government functions independently of those it governs?

[https://en.wikipedia.org/wiki/Regulatory_capture](https://en.wikipedia.org/wiki/Regulatory_capture)

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mnm1
You either support a higher minimum wage and healthcare for everyone, or you
support the Walmart tax. It's really that simple and Walmart is not the only
corporation the "Walmart" tax goes to. We already know what our
"representatives" support.

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anothercomment
So these people would be better off if they didn't have a job at Walmart?

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losvedir
Doesn't this apply to anyone who pays minimum wage? Is there a Walmart
specific aspect I'm missing other than that they're the country's largest
employer?

