Some companies pay corporate taxes but take advantage of loopholes that allow them to reduce what they pay by billions.
Since Walmart is the largest retailer in the world and records billions of profit every year. You might be wondering if Walmart pays taxes or utilizes clever tax loopholes. Here is what I discovered!
Does Walmart Pay Taxes In 2023?
Walmart does pay an average of 31.2% in corporate taxes as of 2023. When compared to the legal corporate tax rate of 21%, Walmart pays its fair share in tax compared to other large companies in the United States. However, there have been reports that Walmart has used tax loopholes in the past, but they have not been confirmed.
To learn more about how much Walmart pays in corporate taxes, whether or not they take advantage of loopholes to pay less, and what Walmart’s corporate taxes look like compared to their main rival, Amazon, keep reading!
How Much Does Walmart Pay In Taxes Every Year?
Walmart pays billions in corporate income taxes, but the amount can vary pretty widely (at least to us non-billion-dollar-corporations) from year to year.
According to the data from Macrotrends.net, Walmart paid $4.281 billion in tax during the last financial year.
Looking forward, it is projected that Walmart will be paying roughly $6.9 billion dollars in tax for 2023, which is a 40% increase.
Does Walmart Dodge Corporate Taxes At All?
Tax dodging by taking advantage of loopholes in the law is by no means a rare occurrence.
In recent years, 60 huge companies were called out by news sources for paying absolutely zero federal income tax.
Within that list, Walmart was not mentioned, but there have been reports that Walmart has been dodging corporate taxes, but these are mostly from the mid-2010s.
However, an interesting story has come out that revealed a Walmart insider and former executive had documents to prove the world’s largest retailer did dodge taxes.
According to Quartz.com, who reviewed the documents, Walmart avoided paying $2.6 billion in taxes by funneling it through a Chinese subsidiary – which turned out to be fake.
According to the documents, the plan – called “Project Flex” – involved creating a fictitious subsidiary that neither the U.S. nor China would claim for tax purposes.
Walmart responded to these allegations, saying the matter had already been investigated by an independent source and the case had been closed by the IRS.
How Much Does Walmart Vs Amazon Pay In Taxes?
Walmart and Amazon are longtime rivals, ever since Amazon swooped in with their eCommerce model and disrupted how we shop forever.
The two companies have traded barbs over the years, most notably when Amazon’s CEO, Jeff Bezos – without naming names – called out his fellow retailers for low pay.
“…I challenge our top retail competitors … to match our employee benefits and our $15 minimum wage. Do it!” he said.
Walmart’s executive VP of corporate affairs shot back, “Hey retail competitors out there … how about paying your taxes?”
Because for two years in a row, Amazon paid ZERO in corporate income tax, despite raking in $13.9 billion in profits (and $280 billion in revenue).
After an investigation but the IRS, Amazon was told to pony up $162 million, which looks like an awful lot.
But according to CNBC.com, that sum – more than most of us would see in 100 lifetimes – represents a mere 1.2 percent tax rate.
Compare that to Walmart’s 31-36 percent corporate tax rate, which the company willingly pays each year.
If Amazon weren’t able to circumvent tax laws for a single year and was forced to pay the U.S. government the 21 percent flat rate, they would have owed $2.73 billion.
If they paid 31 percent, like Walmart, they would have owed the U.S. government $4.309 billion.
To make matters look even worse for Amazon, they actually received a $137 million refund from the U.S. government.
So while Walmart might have dodged billions in taxes in the past, and they may continue to do so, at least they have consistently paid something – and not cost taxpayers millions!
Should Walmart Pay More In Taxes?
Walmart does pay well above the legal corporate tax rate, but many feel they should also focus on paying more to employees directly.
There are certainly complaints that Walmart, and other multinational corporations like it, do not pay enough in taxes.
However, much of the criticism levied toward Walmart involves their payment of employees.
How Much Does Walmart’s CEO Pay In Taxes?
It’s natural to wonder how much the guy at the top of the cash mountain – that is, the CEO of Walmart pays in personal income tax.
After all, he made $20.9 million in 2023!
He would pay $8.18 million in personal income tax based on that amount (or 37 percent), but only $1.3 million is actually his salary.
The rest is tied up in stock awards.
So if the Walmart CEO filed singly, their tax rate is $156,235 + (.37 x 781,600), or 37 percent of the difference between 1.3 million and $518,400.
(You can find the crazy formula for figuring that out here.)
Walmart is an exceptionally profitable company that has shown time and again that they are willing to pay their corporate taxes, even going above and beyond the 21 percent flat rate.
While they have yet to catch up to competitors Amazon and Costco in terms of employee pay, the company does continue to contribute back to the U.S. government at least.