Saturday, March 11, 2006

The Tax Foundation: Wal-Mart Tax

The Tax Foundation has released a report on the possible outcome of Maryland's Wal-Mart Tax.

Maryland’s Wal-Mart tax violates the principle of tax neutrality. According to that principle, tax laws should apply broadly throughout the economy, with no intention of manipulating the behavior of firms but merely of raising revenue for necessary government functions. The Wal-Mart tax is the antithesis of such a principled tax. By manipulating the language of the statute in arbitrary ways, the legislature cynically targeted the law so narrowly that only one firm will be hit by the tax.

By setting an arbitrary standard for health care expenses, the tax will lead to lower wages for Wal-Mart employees in Maryland and/or higher prices for consumers or lower dividends for shareholders. By applying only to corporations with more than 10,000 employees, the tax will distort Wal-Mart’s investment in capital versus labor and depress hiring and wages in the short and long term. Finally, by mandating that Wal-Mart provide a certain level of benefits for its employees, the tax might run afoul of federal law on state regulation of benefits.


Maryland ’s Fair Share Health Care Fund Act will not have much impact on Maryland ’s business tax climate in the short term. However, if it is expanded to other companies, it will be an additional impediment to Maryland ’s ability to attract jobs and investment in the long term. Maryland already has the 17 th highest state and local tax burden in the nation. The additional burden of the Wal-Mart tax will only worsen the state’s current situation, and will do nothing to help the workers it is intended to help.

If lawmakers in other states want to support their working families, they will steer clear of the Wal-Mart tax.

It's a rather long and in depth article that is worth checking out. They did a good job researching their material for the piece. A lot of what is stated is what I agrued a week ago on another blog on the subject, so it's nice to have a bit of backing.

posted by David at 8:18 PM :: Permalink ::

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