Does Walmart Pay Taxes? (Something You Might Be Interested In)

Amazon and Walmart are long-time competitors in the e-commerce sector. In 2018, Amazon paid 0$ in federal income tax after reporting a profit of up to $11 billion. Astonishing, right? You would therefore wonder if the same goes for other retail competitors, particularly Walamart. How much tax does Walmart pay? Read on to find out.

In 2018, former Amazon CEO, Jeff Bezos, possessed challenged other retailers to match Amazon's pay and benefits. Walmart's response was quick; Dan Bartlett—Walmart’s executive vice president of corporate affairs—pointed out how Amazon basically pays no federal income tax, and hence it has the finances to pay employees more.

Dan pointed out that the new Tax Cuts and Jobs Acts (TCJA) were to blame for Amazon’s lack of paying any tax. When Amazon was paying $0 in income tax in 2018, Walmart was paying $4.6 billion. So does Walmart still pay the massive taxes, or has the company learned how to avoid taxes like Amazon? Let’s find out.

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Does Walmart Pay Taxes?

Yes, Walmart pays taxes like any other business. As a corporation, Walmart is obligated to pay federal income taxes, state taxes, and local taxes on its profits. The company may also pay other types of taxes, such as property taxes and sales taxes, depending on the jurisdiction in which it operates.

How Much Tax Does Walmart Pay?

Unlike Amazon, Walmart has been paying taxes since the company was founded. However, just like most companies, Walmart has been reported to avoid up to $1 billion in taxes through various tax loopholes. From 2008 to 2012, Walmart was able to cut its tax bills by about $5.1 billion. In recent years, Walmart has avoided paying billion in taxes for offshore profits.

This is primarily because, as a corporation, Walmart can indefinitely postpone paying any tax on offshore profits that have not been brought to the United States. That notwithstanding, in 2021, Walmart still paid more income tax than some Fortune 100 companies. In 2022, Walmart paid about $4.7 billion in annual income taxes.

This was more than Amazon’s income tax for the same year, which was about $2.1 billion. The following are some of the income taxes paid by some Fortune 100 companies compared to that of Walmart.

Microsoft Corp: $3.3 billion.
JPMorgan Chase & Co: 2.9 billion.
Verizon Communications: $1.9 billion.
Nike Inc: $328 million.
General Motors Co: $20 million.

Corporate margins are surging to new record high levels, yet the biggest corporations in the nations. The issue of paying no taxes goes beyond Fortune 100 companies; dozens of other large companies out there make massive profits, yet they pay nothing or little to nothing as profit.

How Companies Are Benefiting From The Current Taxing System

There are dozens of companies out there that are exploiting the current tax system to avoid paying any taxes. Companies such as American International Group, Dow, Charter Communication, and AT&T reported that they would not pay negative taxes in 2021. These companies enjoyed tax reimbursements from the government instead. Down Inc. reported that it would pay $0 in taxes in 2021 despite making over $1.5 billion. Instead, the company got a tax refund of $46 million.

The same goes for AT&T; the company paid $0 in taxes even after making $29.6 billion in earnings. Charter Communications also reported getting $12 million in tax refunds even after making $6 billion in earnings. Finally, AIG also reported a tax refund of $216 million despite $9.8 billion in earnings. We're talking about some of the largest corporations in the world, raking in billions of dollars in earnings, and yet they won't have to pay any federal income taxes.

Because of the Tax Cuts and Jobs Act (TCJA) of 2017, the nominal tax rate for major corporations is now 21 percent, down from 35 percent. As a result, these companies only pay a portion of what they used to pay initially. The problem is not limited to the corporations on the Fortune 100 list; in fact, dozens of additional businesses did not pay any income tax in 2021. Salesforce, for instance, paid $0 income tax in 2021 despite reporting earnings of $2.7 billion.

Kinder Morgan also paid $0 in taxes while reporting $2.2 billion in earnings. Another great example is Netflix. The corporation paid a meager rate of 1.1% on earnings of $5.3 billion in the United States, despite being slightly outside the Fortune 100.

The Institute on Taxation and Economic Policy (ITEP) claims that former US president Donald Trump is to blame for numerous corporations' decision to pay no federal income taxes in 2018. This may not come as a surprise since he himself was under scrutiny for avoiding paying taxes—He only paid $750 in taxes the in his first year of presidency.

Walmart Vs. Amazon

As aforementioned, Jeff Bezos has previously challenged other retailers to match their employee pay rates and benefits. Walmart responded by telling Amazon to pay its taxes. Walmart also responded by saying that their average hourly rates were actually higher—$17 per hour—if you were to take into consideration employee benefits.

But how is Amazon able to do this, and why is Walmart not taking advantage of the same measures taken by Amazon? Even Steve Wamhoff—ITEP’s Director of Federal Tax Policy—admits to not understanding how Amazon is able to do what they do.

For one, Amazon does not lay out its tax strategy in its public documents. It is, therefore, unclear precisely what breaks the company takes advantage of. Amazon has, however, always been under the watch of the IRS. The company was cited by Elizabeth Warren—former Democratic presidential candidate—in her plan to slap a 7% tax on firms with over $100 million in profits.

Bottom Line

As of 2022, Walmart does pay federal income taxes. There have been reports, however, of the company using tax loopholes to evade paying taxes in the past. Amazon, perhaps Walmarts largest competitor, does not shy from taking advantage of such loopholes. In 2018, Amazon paid $0 in income tax.

This was despite the company making billions of dollars in profit. In 2021, companies such as AT&T, Dow, and Charter Communications reported not paying any taxes and instead getting tax reimbursements from the government. These low taxes have been mainly attributed to the Tax Cuts and Jobs Act (TCJA) of 2017.