While many of Walmart's (WMT) workers rely on food stamps and other government aid to make ends meet, its top eight executives are living better, thanks in part to $298 million in tax-deductible "performance pay" during the past six years.
That's according to a new report from the left-leaning Institute for Policy Studies (IPS), which found that Walmart lowered its federal tax bills by $104 million because of the "performance pay" loophole. Of course, Walmart isn't alone in benefiting from that loophole, which was created in 1993 as a way to allow corporations to take tax deductions for "performance-based pay."
The findings come just days before Walmart's annual shareholder meeting, scheduled for Friday, which will be the scene of protests about low wages.
Given that Walmart is the largest private employer in the U.S. and has come under fire for its wages, which force many employees onto public assistance, its executive pay practices have come into question. Aside from the taxpayer-subsidized performance pay, taxpayers are estimated to spend $7.8 billion a year subsidizing the retailer and the Walton family, according to an April report from Americans for Tax Fairness.
"The $104 million in total pay subsidies to Walmart executives would be enough to cover the cost of free school lunches for 33,000 children for six years," the IPS report noted. "Although exact numbers are unavailable, we estimate that hundreds of thousands of Walmart workers' families qualify for free and reduced-price school lunches."
Walmart disputed the IPS report on performance pay. "The general conclusion from the report is false," said spokeswoman Brooke Buchanan. "Walmart is a pay-for-performance company, and our executive compensation program was developed in the same way as many other companies and complies with federal tax laws."
To coincide with Friday's shareholder meeting, some mothers who work at Walmart are striking this week, walking off their jobs at stores across the country in protest of low wages and unreliable work hours. Women are disproportionately hurt by the retail industry's low pay and "just in time" scheduling, according to a report published Monday from think tank Demos. Walmart is the country's largest employer of women, and women account for 57 percent of its U.S. workforce, the study noted.
A single Walmart Superstore in Wisconsin likely costs taxpayers as much as $1.7 million per year in public benefit programs such as food stamps, according to a 2013 report from the Democratic staff of the U.S. House Committee on Education and the Workforce.
The performance-pay tax loophole is receiving increasing scrutiny, in part because of growing income inequality, with the top 1 percent of U.S. earners -- which includes many top corporate executives -- grabbing 95 percent of income gains in the three years after the Great Recession ended.
If the loophole were closed, taxpayers would save $50 billion over 10 years, according to Congress' Joint Committee on Taxation.
Of course, Walmart is hardly the only company to benefit from the loophole, or to come under fire for reaping its benefits. The top executives at some of America's biggest restaurant chains saw their companies deduct over $200 million in performance pay over the past two years, the IPS found in April. At the same time, the restaurant industry's powerful National Restaurant Association is lobbying against a higher federal minimum wage of $10.10 per hour.