Does Walmart pay taxes? (you will be surprised)
Some companies pay corporate taxes but exploit loopholes to reduce payments by billions of dollars.
Since Walmart is the largest retailer in the world, it makes billions in profits every year. You might be wondering if Walmart pays taxes or exploits a clever tax loophole. Here’s what I found!
Does Walmart pay taxes?
Walmart does pay an average corporate tax of 31.2%. Compared to the statutory corporate tax rate of 21%, Walmart pays a fair amount in taxes compared to other large corporations in the United States. However, there have been previous reports that Walmart has exploited tax loopholes, but this has not been confirmed.
To learn more about how much Walmart pays in corporate tax, whether they exploit loopholes to pay less, and how Walmart’s corporate tax compares to that of its main competitor, Amazon, keep reading!
How much tax does Walmart pay each year?
Walmart pays billions in corporate income taxes, but the amount can vary wildly from year to year (at least for us non-billion dollar companies).
Walmart paid $4.281 billion in taxes in its last fiscal year, according to Macrotrends.net.
Walmart is expected to pay about $6.9 billion in taxes, an increase of 40%.
Is Walmart dodging corporate taxes entirely?
The use of legal loopholes to evade taxes is not uncommon.
In recent years, 60 major corporations have been named in the news media for paying absolutely zero federal income taxes.
In that list, Walmart is not mentioned, but there have been reports that Walmart has been evading corporate taxes, but most of these have been since the mid-2010s.
However, an interesting story emerged which revealed that Walmart insiders and former executives had documents proving that the world’s largest retailer was indeed evading taxes.
Walmart avoided paying $2.6 billion in taxes through a Chinese subsidiary — which turned out to be false, according to Quartz.com, which reviewed the documents.
According to the documents, “Project Flex” involves creating a virtual subsidiary that neither the U.S. nor China will report for tax purposes.
Walmart responded to the allegations, saying the matter was being investigated by independent sources and the IRS case was closed.
How much tax do Walmart and Amazon pay?
Walmart and Amazon are longtime rivals, ever since Amazon swooped in and forever upended the way we shop with its e-commerce model.
The two companies have had a spat over the years, most notably when Amazon Chief Executive Jeff Bezos — who was not named — accused his fellow retailers of underpaying them.
“…I’m challenging our top retail competitors…to match our employee benefits and our $15 minimum wage. Do it!’ he said.
Walmart’s executive vice president of corporate affairs shot back, “Hey, competitors in the retail industry…how about paying taxes?”
Because for the second year in a row, Amazon has zero corporate income taxes despite raking in $13.9 billion in profits (and $280 billion in revenue).
After an investigation by the IRS, Amazon was told to pay $162 million, which seems like a lot of money.
But that number — more than most of us will see in 100 lifetimes — represents just a 1.2 percent tax rate, according to CNBC.com.
Compare that to Walmart’s 31-36% corporate tax rate, which the company is willing to pay every year.
If Amazon can’t dodge tax laws within a year and is forced to pay the US government a flat rate of 21%, they will owe $2.73 billion.
If they paid 31% like Walmart, they would owe the US government $4.309 billion.
To make things look worse for Amazon, they actually received $137 million in refunds from the US government.
So while Walmart may have evaded billions of dollars in taxes in the past, and may continue to do so, at least they’ve been paying for something – instead of costing taxpayers millions!
Should Walmart Pay More Taxes?
It is true that Walmart pays well above the statutory corporate tax rate, but many believe they should also focus on paying more tax directly to their employees.
There are complaints that Walmart and other similar multinationals don’t pay enough taxes.
However, much of the criticism of Walmart concerns how much they pay their employees.
How Much Tax Does Walmart CEO Pay?
It’s natural to wonder how much the man at the top of the cash mountain—that is, the CEO of Walmart—pays in personal income taxes.
After all, he made $20.9 million!
He would have paid $8.18 million in personal income taxes on that amount (or 37%), but his actual salary was only $1.3 million.
The rest has to do with stock awards.
So, if the Walmart CEO filed separately, their tax rate would be $156,235 + (.37 x 781,600), or 37% of the difference between $1.3 million and $518,400.
(You can find the crazy formula for solving this problem here.)
If you want to read more about Walmart, you can also read our related posts on which companies Walmart owns, whether Walmart owns Asda, and whether you can file your taxes at Walmart.
in conclusion
Walmart is an exceptionally profitable company that has repeatedly demonstrated their willingness to pay corporate taxes, even a flat rate of over 21%.
While they haven’t caught up to rivals Amazon and Costco in employee compensation, the company will at least continue to give back to the U.S. government.
