Since it is the nations largest private employer, I'm choosing Walmart to represent the corporate model for mass corporate employers of low-skilled workers. What I say about Walmart could apply to Target, Home Depot, etc.First, a few facts.
Walmart employs some 2.2 million people, of which 1.4 million work in the US. Walmart employs approximately 1% of the US work force.
The average Walmart sales associate makes $8.81 an hour.
2011 profits were $15.7 billion.
Now, the common arguments we've all heard many times.
Walmart is an example of how free enterprise works. Thanks to the Walton's millions of Americans have jobs. The Walton's are billionaires, and pay far more in federal taxes than thousands of Americans combined. Their stores allow millions of customers to save money by paying lower prices, hence they are economically better off than they would otherwise be.
To borrow a line from Lee Corso, not so fast my friend.
On the rare occasions I've shopped at Walmart, I've noticed that the majority of employees are adults beyond the age of a typical college student. That may not be true everywhere, and it may be an erroneous observation, so I'm going to say the employees at Walmart that fall into the category of non-student, working adult, range anywhere from 30%-60%.
As an IRS employee, I am familiar with refundable credits, particularly EIC and the Additional Child Tax Credit. Pay attention.
Like other employers (due to Obamacare), Walmart is shifting more to a part-time work model for their associates. Using $10/hour as the base wage, the typical worker might work 30 hours per week which corresponds to roughly $15,000 per year in wages paid by Walmart. If that worker has 2 or more dependents, they would qualify for around $5,500 in EIC when tax season rolls around. If the dependents are under 17 years of age, they would qualify for another $1,800 or so of the Additional Child Tax Credit. Both of these credits are based on wages paid. In other words, the employee who is compensated $15,000 by Walmart might be compensated another $7,000+ courtesy of the US taxpayer. So almost 1/3rd of the income received by the employee is paid by the US tax payer. This is basically a subsidy to Walmart.
Assuming just 30% of the Walmart work force meets this criteria (dependents claimed on return) we're talking about 1.4 million x 30% x $7,000 = $2.94 billion. If 60% of the work force falls into this category, you can double that to almost $6 billion. So basically, $3-$6 billion is being transferred from the tax paying public every year to Walmart's coffers to act a subsidy to them. Looking at it another way, if 60% of the Walmart employees are compensated by the taxpayer and provide 1/3rd of their income, then 20% of the compensation paid out to Walmart employees comes from the general public. You might say that 1/5th of the Walmart employees work for the government.
The way I look at it, the millions and perhaps billions of taxes paid by the Walton family in taxes, is basically transfer payments from the taxpaying public to Walmart. The Waltons use our tax money to enrich themselves, and then pay taxes, some of which then flows back to their employees.
Suppose for a minute that the tax code changed to eliminate the refundable credits. I would suppose that many of the adults who have dependents would quit working there ($15,000 no longer cuts it without subsidies of some sort). I would think we are talking about a few hundred thousand (if you include Target and other low-skilled employers we're talking about a few million). There is a large number of youth who would be willing to take there places at $10/hour, but probably not enough to fill the void, and Walmart would raise prices a little and raise wages some what. Is it worth paying lower prices to shop at Walmart (and places like that) when the "savings" are basically an entry on the national debt (We really aren't paying for all of these subsidies yet, as some 40% of it is added to the national debt and to be paid by later generations with interest).
It's hard to say exactly what all the positive and negative ramifications would be. But one thing is clear, at least to me. The current model is far from free enterprise. We have a state assisted crony-capitalist system where the super wealthy and the poor benefit off the backs of everyone else and this model is steadily breaking down. The population is now dependent on deficits and propaganda is being used to disguise what is no longer anything close to a capitalist, free-market system. I wish I had some answers. Any suggestions?
Walmart employs some 2.2 million people, of which 1.4 million work in the US. Walmart employs approximately 1% of the US work force.
The average Walmart sales associate makes $8.81 an hour.
2011 profits were $15.7 billion.
Now, the common arguments we've all heard many times.
Walmart is an example of how free enterprise works. Thanks to the Walton's millions of Americans have jobs. The Walton's are billionaires, and pay far more in federal taxes than thousands of Americans combined. Their stores allow millions of customers to save money by paying lower prices, hence they are economically better off than they would otherwise be.
To borrow a line from Lee Corso, not so fast my friend.
On the rare occasions I've shopped at Walmart, I've noticed that the majority of employees are adults beyond the age of a typical college student. That may not be true everywhere, and it may be an erroneous observation, so I'm going to say the employees at Walmart that fall into the category of non-student, working adult, range anywhere from 30%-60%.
As an IRS employee, I am familiar with refundable credits, particularly EIC and the Additional Child Tax Credit. Pay attention.
Like other employers (due to Obamacare), Walmart is shifting more to a part-time work model for their associates. Using $10/hour as the base wage, the typical worker might work 30 hours per week which corresponds to roughly $15,000 per year in wages paid by Walmart. If that worker has 2 or more dependents, they would qualify for around $5,500 in EIC when tax season rolls around. If the dependents are under 17 years of age, they would qualify for another $1,800 or so of the Additional Child Tax Credit. Both of these credits are based on wages paid. In other words, the employee who is compensated $15,000 by Walmart might be compensated another $7,000+ courtesy of the US taxpayer. So almost 1/3rd of the income received by the employee is paid by the US tax payer. This is basically a subsidy to Walmart.
Assuming just 30% of the Walmart work force meets this criteria (dependents claimed on return) we're talking about 1.4 million x 30% x $7,000 = $2.94 billion. If 60% of the work force falls into this category, you can double that to almost $6 billion. So basically, $3-$6 billion is being transferred from the tax paying public every year to Walmart's coffers to act a subsidy to them. Looking at it another way, if 60% of the Walmart employees are compensated by the taxpayer and provide 1/3rd of their income, then 20% of the compensation paid out to Walmart employees comes from the general public. You might say that 1/5th of the Walmart employees work for the government.
The way I look at it, the millions and perhaps billions of taxes paid by the Walton family in taxes, is basically transfer payments from the taxpaying public to Walmart. The Waltons use our tax money to enrich themselves, and then pay taxes, some of which then flows back to their employees.
Suppose for a minute that the tax code changed to eliminate the refundable credits. I would suppose that many of the adults who have dependents would quit working there ($15,000 no longer cuts it without subsidies of some sort). I would think we are talking about a few hundred thousand (if you include Target and other low-skilled employers we're talking about a few million). There is a large number of youth who would be willing to take there places at $10/hour, but probably not enough to fill the void, and Walmart would raise prices a little and raise wages some what. Is it worth paying lower prices to shop at Walmart (and places like that) when the "savings" are basically an entry on the national debt (We really aren't paying for all of these subsidies yet, as some 40% of it is added to the national debt and to be paid by later generations with interest).
It's hard to say exactly what all the positive and negative ramifications would be. But one thing is clear, at least to me. The current model is far from free enterprise. We have a state assisted crony-capitalist system where the super wealthy and the poor benefit off the backs of everyone else and this model is steadily breaking down. The population is now dependent on deficits and propaganda is being used to disguise what is no longer anything close to a capitalist, free-market system. I wish I had some answers. Any suggestions?
