Wal-Mart

Conservative estimates show that Wal-Mart has garnered over $1.2 billion in subsidies nationwide.³  In addition, Wal-Mart is notorious for questioning assessments of its property in an effort to lower its taxes. Public subsidies that Wal-Mart and its developers have received range from infrastructure assistance and tax breaks to government grants. Most of these subsidies can be allocated without a public hearing or city council input. 

Despite efforts from the world’s largest retailer, New York City is still without a Wal-mart. There are stores in other parts of the state, some of them subsidized. Nationally, the retailer has received over $1.2 billion is subsidies. Examples of subsidized Wal-marts in New York State include:

For a database of counties and states that of Wal-mart’s that  benefit from taxpayer subsidies visit  Wal-Mart Subsidy Watch, created by Good Jobs First, our parent organization.

Some other large big box stores receive benefits in the form of as-of-right incentives. A sample of two that receive discretionary benefits include the parking lot at a mall in East Harlem and Gateway Mall in the Bronx.

Good Jobs First also conducted research on how subsidizing big box retailers  generally  like Wal-Mart and Target  often are an unwise investment and often fail to benefit communities. Learn more and check out the publications and resources page at Good Jobs First.  

GJNY testified at a February 2011 city council hearing regarding Wal-mart’s effect on small businesses and communities. Read our statement from the hearing or download our written testimony. 

Wal-Mart’s Subsidy History

Conservative estimates show that Wal-Mart has garnered over $1.2 billion in subsidies nationwide.³  In addition, Wal-Mart is notorious for questioning assessments of its property in an effort to lower its taxes. Public subsidies that Wal-Mart and its developers have received range from infrastructure assistance and tax breaks to government grants. Most of these subsidies can be allocated without a public hearing or city council input. A list of potential subsidies for a Wal-Mart store is below.

Free or reduced-price land. Would require a Request for Proposal, but not necessarily a public hearing.

Infrastructure assistance. This benefit includes construction of access roads, water and sewer lines, and other forms of infrastructure. 

Tax increment financing (TIF). TIFs, originally intended to help revitalize blighted areas, have been used in many states for projects involving big-box stores in newly-developing or even prosperous areas. TIFs have yet to take hold in New York City.

Property tax breaks. Wal-Mart (and many other companies) has been known to avoid property taxes indefinitely by letting ownership of the facility remain with or be place with a public authority, thus making it tax-exempt. This process could take place through the New York City Industrial Development Agency or the Empire State Development Corporation, for example, where the firm could also apply for various sales and use tax breaks and would require a public hearing. 

Depending on location of the store, companies are eligible for the city’s Industrial Commercial Abatement Program (ICAP), a break on property taxes. ICAP is an as-of-right benefit meaning a firm is eligible based solely on its location and business type. There are no public hearings before this benefit is allocated. State corporate income tax credits. The value of this credit is nearly impossible to clarify as the only way to know the amount of credits is to review firms’ tax returns, which are not public.

Sales tax rebates. Many states allow retailers to retain some of the sales tax it collects from customers on behalf of local government as compensation. This has become a major issue in many states but less so in New York State – called the Vendor Collection Credit – where there is a ceiling of $200 per quarter per outlet. This means retailers (not just Wal-Mart) kept $54 million in collected sales taxes in 2007 it collects.⁴  However, it’s worth noting that this subsidy, especially for big box retailers, could be considered antiquated.

Excelsior (formerly Empire Zone) benefits. Like ICAP (mentioned above), the Excelsior Program is an as-of-right program that is dependant on a developer’s location and provides a variety of subsidies, such as property tax abatements, state tax credits, sales tax exemptions, and reduced utility rates.

Job training and worker recruitment funds. Given the low skilled nature of some of the position at retailers, it’s not surprising this subsidy is available to companies like Wal-Mart based on who they hire.

Tax-exempt bond financing. This benefit is available through the New York City Industrial Development Agency and the Empire State Development Corporation or other Local Development Corporation. Thanks to the Tax Reform Act of 1986, a public hearing would be required prior to the allocation of bonds.

General grants. For example, in Johnstown, New York a Wal-Mart distribution center received a $650,000 Jobs Now Grant.