Walmart’s Executive Bonuses Cost Taxpayers Millions

Walmart's Executive Bonuses Cost Taxpayers Millions Report CoverWalmart has been widely criticized for shifting the costs of its low-wage model onto taxpayers. This report, co-published by IPS and Americans for Tax Fairness, reveals that taxpayers also subsidize much of the cost of Walmart’s executive pay. Specifically, the report calculates the cost of a tax loophole that allows Walmart and other corporations to deduct unlimited amounts from their income taxes for the cost of executive compensation if it is in the form of stock options and other so-called “performance pay.”

Key report findings:

  • Walmart reduced its federal tax bills by an estimated $104 million over the past six years by exploiting a tax loophole that allowed eight top executives to pocket more than $298 million in “performance pay” that was fully tax deductible. That sum would have been enough to cover the cost of free school lunches for 33,000 children for those six years.
  • Michael T. Duke, Walmart’s recently retired President & CEO and currently Chairman of the Executive Committee of the Board of Directors, pocketed nearly $116 million in exercised stock options and other “performance pay” during the period 2009-2014. That translates into a taxpayer subsidy for Walmart of more than $40 million—enough to cover the average cost of food stamps for 4,200 people for those six years.
  • Taxpayers would save $50 billion over 10 years, according to the Joint Committee on Taxation, if Congress closed this perverse “performance pay” loophole by capping the tax deduction at $1 million for each employee’s total compensation, with no exceptions for performance pay.

Download the full report [PDF].

Download a table with detailed year-by-year data on pay subsidies among Walmart’s top executives [PDF].

  • ORAXX

    This is why the right wing wants to keep the public’s attention focused on the single mother on food stamps, and straw men like Reagan’s non-existent ‘welfare queen’.

  • Mike

    I’m not sure if you guys are being misleading on purpose or out of ignorance. Any performance pay is fully taxable to the individual. You are making it seem like they are avoiding taxation. These execs pay close to 50% of that in taxes.

    I’m not saying that executive compensation is not in need of reform but this kind of journalism is going to hurt the cause more than help it.

    They tried capping exec comp and companies found a way around it. Close that loophole and another opens. You can’t make policy in a vacuum!

    • Darknut

      “Close that loophole and another one opens…” You forgot to say “…hail Hydra” at the end of that. So we should give up and stop trying? That free money they’re pilfering from their shareholders and employees has nothing to do with “performance” and everything to do with “What they can get away with.” When another loophole opens, close that one too. The “50% tax” is bs. the executives pay less % taxes than their lowest underlings.

  • rons426

    Employee stock options (ESO) should be outlawed / repealed. When this provision was passed in 1950 as part of the Revenue Act of 1950 by DEMOCRATS, it was supposed to give the “rank and file” or blue collar worker participation in the profits in corporations. 100% of workers were supposed to get these ESO’s. Once corporate lawyers got finished with it, less than 2% of employees get them!!!! Senior management only, this is the main cause of the income inequality / income gap. There is no fixing it, just repeal it. Let senior management get paid with stock dividends from stock they buy, just like stockholders. One more thing, because dividends are taxed twice / double taxed, thanks Democrats again, 60% to 80% of corporations do not pay them. Guess where the profits go???? ESO!!!!! Outlaw taxes on dividends and force corporations to pay at least 85% of profits in dividends. And who are the largest owner of stocks in America??? Pension funds!!