State of Maine: Walmart’s blueprint for success: Big stores, low taxes



It is early in the year, but we might be ready to decide the winner of the annual “Why Didn’t I Think of That?” contest. Hands down, it’s Walmart and its recent request for a tax abatement to the city of Ellsworth. The request seems to be based on Walmart’s assertion that its retail properties are essentially worthless. That’s right. Worthless.

One must put aside the matter of Walmart’s net sales, which in 2018 were estimated at a little over $500 billion, to imagine Walmart stores as worthless. After all, the sales take place there, so we might guess there is some value to the stores. Nope.

The stores are so big that they are the albatross around the neck of founder Sam Walton’s best idea. It is their very bigness that is the problem. When Walmart (or any other big-box store) is done with a property, it is too big to be of practical use to anyone else. So, say they, those vast stores laden with merchandise should actually be assessed as if they were empty.

A fascinating article in The Ellsworth American (April 11) lays out the company’s logic in requesting the abatement, currently a national pastime for the business. And it looks as though there is more than one place taking the bait. In Maine this year, abatements requested total about $41 million, an amount that would punch a big hole in the tax revenues of host municipalities.

The whole argument about how worthless a big-box store is only comes into play if a store moves out. Until then, your basic clam-digging, bartending, school-teaching, wood-cutting Mainer might be forgiven for thinking Walmart is sitting pretty.

Big-box pricing may be important to many customers, but the introduction of these stores has threatened locally owned businesses in our struggling downtowns, paved over large tracts of formerly wooded land and provided jobs with salaries that leaves the Walmart workforce filling its income gap with public assistance.

From humble beginnings in Arkansas in 1962, Walmart has become “the world’s largest corporation by revenue as well as the biggest private employer in the world,” according to Wikipedia. Founder Walton (known, according to the store’s website, as “Mr. Sam”) was once the “richest man in America.”

You don’t get rich by throwing money away, so if the heirs of the richest man in America can persuade host communities that the property on which those riches is founded is, when you think about it, worthless, well played to you, Walmart.

When Mr. Sam received the Presidential Medal of Freedom from President George H.W. Bush in 1992, he said this: “If we work together, we’ll lower the cost of living for everyone … we’ll give the world an opportunity to see what it’s like to save and have a better life.”

Are not the requested tax abatements simply how “saving” plays out in the corporate world? Surely that will be of some comfort when you discover that you have not withheld enough from your paycheck to cover the cost of the “tax break” brought to you by the current federal administration.

As you write your check to the IRS, part of which will go to picking up the slack in what Walmart will no longer pay wherever its abatements are granted, remember that we are “working together” here and quit your complaining.

Doing the tax dance with Walmart attorneys is not inexpensive. So far the efforts reported in Ellsworth have been rather desultory, consisting of pro forma requests that have not been pursued with the full might of a half-trillion-dollar business. Other towns in Maine have been pressed harder, and Ellsworth may yet be.

The Walmart website asserts the business’s “efforts to constantly improve what we do and how we do it.” Boy howdy! The world’s biggest retailer is seeking to improve its bottom line at our expense.

Americans for Tax Fairness says the company receives an estimated “$7.8 billion per year in federal subsidies and tax breaks,” including $70 million annually in “economic development subsidies” from state and local governments.

A “subsidy tracker” from goodjobsfirst.org puts Maine in the top five states for subsidies to Walmart. The Washington Post, reviewing Capital IQ data, said in 2013 that Walmart’s taxes as a percent of its income dropped over 24 percent between 1971 and 2012.

Rule No. 10 of Sam Walton’s “Ten Rules for Building a Business” is “Swim Upstream.” Looking for a tax abatement for this massively successful business would seem to be swimming upstream, but Walmart is “shaved and tapered,” swimmer talk for being ready for the challenge.

The recent hollowing out of local malls gives credence to the “dark store” theory. That is some seriously forlorn real estate. A business model that depends on the argument that its property is worthless gives fair warning to communities from whom these stores seek permits.

jillgold@gwi.net

Jill Goldthwait

Jill Goldthwait

Retired nurse and former independent Maine State Senator.

Leave a Reply

Your email address will not be published. Required fields are marked *