Wal-Mart's State Tax Evasion Ploy: Paying Rent to Itself

This article is by Jesse Drucker and first published by The Wall St. Journal, February 1, 2007. The picture to on the left is the cycle Wal-mart pays its taxesThe article is about Wal-mart and other large companies that have gotten away with not paying millions of dollars in taxes through a loop hole that states have not caught on to. This is how they did it, a Wal-Mart subsidiary pays the rent to a real-estate investment trust, or REIT, which is entitled to a tax break if it pays its profits out in dividends. The REIT is 99%-owned by another Wal-Mart subsidiary, which receives the REIT's dividends tax-free. And Wal-Mart gets to deduct the rent from state taxes as a business expense, even though the money has stayed within the company. Wal-mart has only paid half of the state taxes in the last decade. Some corporate state tax planners say arrangements like these are smart business choices. I feel that companies should get out of paying taxes. It isn't fair to the small businesses that have to pay all their taxes and big companies don't. All businesses should have sit rule have to pay a set tax. This will make thing fair. If you want to read the whole article go to this web sit http://www.reclaimdemocracy.org/walmart/2007/state_tax_dodge_rent.php