Wal Mart Real Estate Tax Engineering

Wal*Mart
Originally uploaded by beija

I keep meaning to blog about the article from a couple weeks ago in the Wall Street Journal, which discusses how Wal Mart (other companies do this too) created real estate investment trusts to hold properties and receive rent payments, in order to reduce taxable income.

The Wal Mart Watch website includes the WSJ article in this entry, "Wal-Mart Tax-Dodging Schemes Exposed." The Charlotte Observer has written about North Carolina's response to this practice, which Wal Mart is challenging in Court. See "Wal-Mart tax fight raising a paper storm: Retailer seeks big N.C. refund."

Putting property into separate corporations for tax management purposes, and putting trademarks into separate corporations and requiring each individual store to pay licensing fees to the corporation, to increase costs and reduce taxes, are methods that large retail corporations have at their disposal which further disadvantage independent retailers in terms of cost structures and other financial advantages, making it even more difficult for independent retailers to compete with chains.

(Flickr photo by Beija.)