{"id":3063,"date":"2007-10-23T16:25:51","date_gmt":"2007-10-23T16:25:51","guid":{"rendered":"http:\/\/zmetro.com\/?p=3063"},"modified":"2007-10-23T16:25:51","modified_gmt":"2007-10-23T16:25:51","slug":"inside_walmarts","status":"publish","type":"post","link":"https:\/\/www.zmetro.com\/?p=3063","title":{"rendered":"Inside Wal-Mart&#8217;s Bid to Slash State Taxes &#8211; Our Political Class at Work"},"content":{"rendered":"<p>&#038;<a href=\"http:\/\/www.emailthis.clickability.com\/et\/emailThis?clickMap=viewThis&#038;etMailToID=2002456553\">Jesse Drucker<\/a>: <\/p>\n<blockquote><p><i;Wal-Mart has switched state income-tax strategies several times over the past 15 years, coming up with new approaches as states attack existing ones, court records show. In the early 1990s, it employed an \"intangibles holding company,\" a unit operating in tax-friendly Delaware into which it transferred ownership of its brand names such as Sam's Club. It then made payments to that unit for use of those brands, deducting them as expenses from its taxable income in other states, according to court records. That strategy fell out of favor after several states successfully challenged Wal-Mart and other companies in court over the maneuver.\nAbout a decade ago, Wal-Mart adopted another approach, following advice from Ernst &#038; Young. Wal-Mart transferred ownership of its stores to various in-house real-estate investment trusts. REITs pay no corporate income tax as long as they pay out at least 90% of their income to shareholders as dividends, which are usually taxed. Wal-Mart paid tax-deductible rent to those REITs. For one four-year period, the setup saved the retailer an estimated $230 million on its tax bill, even though the rent payments never left the company.\nThat strategy was the focus of a Wall Street Journal article in February. Since then, at least six states, including New York, Illinois, Maryland and Rhode Island, have passed laws attempting to prohibit the maneuver, which also has been used by banks and other retailers such as AutoZone Inc. The practice is being challenged by tax authorities in at least four other states, court records show.<\/i><\/p><\/blockquote>\n<p>Legislative sausage supported by our elected officials only makes these &#8220;loopholes&#8221; worse.  Here&#8217;s an example that both Russ Feingold and Herb Kohl supported &#8211; <a href=\"http:\/\/www.zmetro.com\/archives\/003331.php\">a 5.25% offshore earnings tax rate for major corporations<\/a>.  More <a href=\"http:\/\/www.zmetro.com\/cgi-bin\/mt\/mt-search.cgi?IncludeBlogs=1&#038;search=Feingold\">here<\/a>.  Another <a href=\"http:\/\/www.zmetro.com\/archives\/006968.php\">example of special interest legislation<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#038;<a href=\"http:\/\/www.emailthis.clickability.com\/et\/emailThis?clickMap=viewThis&#038;etMailToID=2002456553\">Jesse Drucker<\/a>: <\/p>\n<blockquote><p><i;Wal-Mart has switched state income-tax strategies several times over the past 15 years, coming up with new approaches as states attack existing ones, court records show. In the early 1990s, it employed an \"intangibles holding company,\" a unit operating in tax-friendly Delaware into which it transferred ownership of its brand names such as Sam's Club. It then made payments to that unit for use of those brands, deducting them as expenses from its taxable income in other states, according to court records. That strategy fell out of favor after several states successfully challenged Wal-Mart and other companies in court over the maneuver.\nAbout a decade ago, Wal-Mart adopted another approach, following advice from Ernst &#038; Young. Wal-Mart transferred ownership of its stores to various in-house real-estate investment trusts. REITs pay no corporate income tax as long as they pay out at least 90% of their income to shareholders as dividends, which are usually taxed. Wal-Mart paid tax-deductible rent to those REITs. For one four-year period, the setup saved the retailer an estimated $230 million on its tax bill, even though the rent payments never left the company.\nThat strategy was the focus of a Wall Street Journal article in February. Since then, at least six states, including New York, Illinois, Maryland and Rhode Island, have passed laws attempting to prohibit the maneuver, which also has been used by banks and other retailers such as AutoZone Inc. The practice is being challenged by tax authorities in at least four other states, court records show.<\/i><\/p><\/blockquote>\n<p>Legislative sausage supported by our elected officials only makes these &#8220;loopholes&#8221; worse.  Here&#8217;s an example that both Russ Feingold and Herb Kohl supported &#8211; <a href=\"http:\/\/www.zmetro.com\/archives\/003331.php\">a 5.25% offshore earnings tax rate for major corporations<\/a>.  More <a href=\"http:\/\/www.zmetro.com\/cgi-bin\/mt\/mt-search.cgi?IncludeBlogs=1&#038;search=Feingold\">here<\/a>.  Another <a href=\"http:\/\/www.zmetro.com\/archives\/006968.php\">example of special interest legislation<\/a>.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,17],"tags":[],"_links":{"self":[{"href":"https:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/posts\/3063"}],"collection":[{"href":"https:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.zmetro.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3063"}],"version-history":[{"count":0,"href":"https:\/\/www.zmetro.com\/index.php?rest_route=\/wp\/v2\/posts\/3063\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.zmetro.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3063"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.zmetro.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3063"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.zmetro.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3063"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}