Your Economy (No Politics)

[mr40]

Myth Busted: Taxpayers Are Not Subsidizing Wal-Mart's Low Wages
4/13/2017

Wages: It's tax season, which means that union groups are once again out in force claiming that because Wal-Mart (WMT) doesn't pay its workers enough, taxpayers are forced to make up the difference. This is, to put it politely, pure poppycock.

The latest to make this claim is Lonnie Sheppard of the United Food and Commercial Workers Union, who says that "every American taxpayer is paying a tax they never heard of: the Wal-Mart Tax."

"What is the Wal-Mart Tax?" Sheppard asks. Wal-Mart pays so little that "thousands of Wal-Mart employees are forced to rely on public assistance programs like food stamps, Medicaid and subsidized housing. Programs funded by American taxpayers."

Sheppard goes on to write that "According to a 2014 report by Americans for Tax Fairness, Wal-Mart receives an estimated $6.2 billion in subsidies every year, primarily from the Federal Government." If Wal-Mart would only pay its workers more, the argument goes, taxpayers would save all this money.

USA Today's editors apparently didn't bother to look into that ATF report before publishing this piece, so we did. The ATF — a coalition of union and liberal advocacy groups — based its findings on a 2013 report written by Democrats on the House Education and the Workforce Committee. In other words, none of these sources is objective by any means.

House Democrats based their findings on data from one state — Wisconsin.
They found that 3,216 Wal-Mart workers were enrolled in the state's Medicaid program. Based on this number, the report calculates that a Wal-Mart Supercenter cost taxpayers between $904,542 and $1.7 million a year.

To get that number, Democrats assumed that everyone enrolled in Medicaid is also enrolled in every other public program available for low-income families — including food stamps, subsidized housing, child care subsidies, the Earned Income Tax Credit, and more — which accounted for 72% of the supposed taxpayer costs.

Plus, the report admits that "extrapolating taxpayer costs for Wal-Mart stores in other states based on the Wisconsin data is difficult" in large part because the state had looser rules for who could enroll in Medicaid.

No matter. Americans for Tax Fairness simply took this already grossly inflated number and applied it to the rest of the nation. And voila, it came up with its $6.2 billion "Wal-Mart Tax."

(By the way, Wal-Mart actually paid $6.2 billion in federal income taxes in 2014.)

Even if some Wal-Mart employees are collecting government benefits, that doesn't mean taxpayers are subsidizing Wal-Mart. Many of those government aid programs are designed specifically to supplement wage income. In fact, Democrats are constantly pushing to expand eligibility for these programs so more working families can collect government benefits. Blaming Wal-Mart because some do makes no sense.

What's more, if the government forced Wal-Mart to raise its wages — which is the entire point of these union-backed "studies" — that would likely cost taxpayers more. Why? Because Wal-Mart would hire fewer workers, leaving still more people dependent on government programs. Or it would be forced to raise prices, which would hurt lower-income families hardest.

Tax time is taxing enough without having to deal with misleading union propaganda masquerading as research.

https://www.investors.com/politics/editorials/myth-busted-taxpayers-are-not-subsidizing-wal-marts-low-wages/