Your Tax Dollars Pay for Walmart Execs’ Bonuses

http://www.thefiscaltimes.com/Articles/2014/06/04/Your-Tax-Dollars-Pay-Walmart-Execs-Bonuses

BY YUVAL ROSENBERG, The Fiscal Times
June 4, 2014

From 2009 to 2014, Walmart awarded Michael Duke, its CEO until late last year, nearly $116 million in so-called performance pay — exercised stock options and other compensation that carried an added benefit: It was fully tax deductible, meaning the company got an added $40 million in federal tax breaks, according to a new report from tax-reform advocates at Americans for Tax Fairness and the left-leaning Institute for Policy Studies.

Over that same period, the report finds, Walmart got $104 million in tax breaks for $298 million in performance pay awarded to eight top executives. The groups behind the report say taxpayers are left to foot the bill for this “massive subsidy for excessive executive compensation” because of what they call a loophole that allows all performance-based pay to be deducted from corporate income taxes.

That provision was created as part of a 1993 reform meant to discourage excessive executive pay. The law capped the tax deductibility of employee pay at $1 million but allowed companies to still deduct unlimited amounts of “performance-based compensation.”

“When Walmart gets a $104 million tax break for giving its executives outrageous pay packages, the rest of us pick up the tab,” Frank Clemente, executive director at Americans for Tax Fairness, said in a statement. “With this tax loophole, the bigger the executive bonuses the less Walmart pays in taxes. This is truly one of the most perverse loopholes of all time.”

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the retailer’s executive compensation plan has also recently faced criticism from Institutional Shareholder Services (ISS), a firm that advises investors on proxy votes, and CtW Investment Group, which works with pension funds sponsored by unions.

The criticism of Walmart’s pay, and the tax law that allows such deductions, comes on the same day that employees and union organizers with a group called OUR Walmart plan to stage strikes in 20 cities in an effort to pressure the retailer to raise wages. The protesters want the company to pay its associates at least $25,000 a year. The strikes are timed to coincide with the company’s annual shareholder meeting taking place on Friday.

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Critics, including the authors of the new report, say Walmart’s pay practices subject U.S. taxpayers to a double hit: Not only does the company get to deduct performance pay for executives from its taxes, but it pays it workers so little that many of them rely on public assistance programs like food stamps and Medicaid. Americans for Tax Fairness estimated that Walmart employees receive $6.2 billion a year in taxpayer-funded subsidies. - See more at: http://www.thefiscaltimes.com/Articles/2014/06/04/Your-Tax-Dollars-Pay-Walmart-Execs-Bonuses#sthash.IsdmAFKZ.dpuf

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