- November 6, 2018
- Posted by: Trading
- Category: News
As some Walmart workers struggle to get by, the company’s owners are thriving.
The Walton family, majority stakeholders of supermarket giant Walmart
benefitted from an estimated $6.5 billion in tax breaks on share holdings over the last 16 years, according to an analysis from union-backed national campaign for Making Change at Walmart. This works out at an average of $1.1 million per day in savings.
The researchers estimated the total value of dividend income received by the Walton family from 2003 through 2018. Secondly, they added the total shares held by Walton Enterprises LLC with the shares of the Walton Family Holdings Trust, as reported in the SEC filings for each year. They then applied the tax cuts introduced by various presidencies over that time. Thirdly, they compared two scenarios: tax cuts and no tax cuts between 2003 and 2018.
Their conclusion: Tax reforms passed by Congress during the Bush, Obama, and Trump administrations since 2003 have resulted in billions of dollars in lower tax rates on dividends for the Walton family and other stock owners. This began with President George W. Bush signing the Jobs Growth and Tax Relief Reconciliation Act of 2003.
Some Walmart employees struggle financially
Workers at Walmart struggle with poverty and erratic schedules, said Amy Ritter, spokeswoman for Making Change at Walmart. “The Walton family is being subsidized even as Walmart workers live paycheck-to-paycheck with jobs that have few benefits,” she said. What’s more, only half of Americans actually own stocks, so they won’t benefit from cuts in tax rates on dividends.
The typical Walmart worker makes $19,177 per year and many low-wage employees at the company rely on public assistance, according to a 2015 study from the University of California Berkeley Labor Center. Low-wage employees of corporations like Walmart and McDonald’s
cost taxpayers $153 billion in public assistance, it said.
A spokesman for Walmart said the company strongly disagrees with the studies conclusions, particularly in relation to the working conditions of employees. Since 2015, the company has spent “billions” on investing in education training and wages for associates, the said. Walmart increased its minimum wage to $11 per hour effective February 2018, and a spokesman previously told MarketWatch that the company’s full-time hourly workers is $13.79 an hour.
Tax rates for middle- and lower-class Americans have seen little change for the past two decades, according to data from the Internal Revenue Service. The income tax bracket for married couples making between $19,000 and $77,000 was 12% in 2018, down from 15% in 2003. With changes in payroll taxes, it’s likely workers’ take-home pay has remained the same in this time period, Steven Rosenthal, senior fellow at Urban-Brookings Tax Policy Center, said.
Meanwhile, President Trump’s tax bill signed into law in December lowered the corporate tax rate to 21% from 35%. The hope: The tax cuts would boost corporate finances and those benefits would trickle down to help workers. However, only 14% of companies put part of those savings into base salary increases, according to an October 2018 survey from executive-recruitment firm Korn Ferry International. Another survey from consulting firm Mercer LLC put that figure at only 4%.
These cuts may ultimately increase the federal deficit, after which Congress will pass further cuts to social programs like Medicaid and SNAP food assistance due to lack of funding. “That is where the middle class is really going to start to see the effects of these tax cuts,” Rosenthal said. “Not from a salary increase, but when they start to see their services get cut.”
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