London - There are lots of arguments about why Wal-Mart has been good for the American economy. Almost all are bunk. The jobs it has created are worse than the jobs it killed off in the first place, and the wealth it has created is concentrated in far fewer hands than the wealth it destroyed.
The truth is, no single company is more responsible for the decline of the American middle class and manufacturing industry than Sam Walton's pile 'em high, sell 'em cheap warehouse. And, in turn, nobody is more to blame than Americans themselves.
That the retail giant is stashing billions in offshore tax havens is no shock, even if the extent of its tax avoidance is shocking. A report by Citizens for Tax Justice, a liberal think-tank, claimed this week that Wal-Mart has 78 offshore subsidiaries, including 22 in Luxembourg alone. The assets held in the tiny EU state, real estate and cash, are worth $64bn (£40bn) and “generated” something like $1.3bn in profits just last year. Wal-Mart paid a tax bill there of only $13m, 1 per cent.
Needless to say, despite all of those assets and all of that profit, Wal-Mart doesn't have a single store in Luxembourg. No wonder Luxembourg is so popular with American corporations, and no wonder the standard of living is so high there. Money for old rope.
It should be noted that Wal-Mart disputed the claims, albeit in an opaque manner that served only to fog the issue further. Tellingly, what it did not appear to dispute is that it has 78 offshore subsidiaries - all omitted from its Securities and Exchange Commission filings.
Tax avoidance, even on the grand scale it is done by modern corporations, is common and Wal-Mart is far from alone in its enthusiasm for creating incredibly profitable offshore subsidiaries. Stashing billions of dollars of assets and profits in countries where no other business is conducted might be pushing the ethical envelope but is not illegal. It should be, even if many Americans see avoiding tax and letting others carry the burden as the ultimate act of patriotism.
Meanwhile, EU member states like Luxembourg and the Netherlands (another popular tax haven) are, disgracefully, more than willing participants. The sooner the EU cracks down on this absurd situation, the better.
In spite of it all, Wal-Mart just does what it can get away with. Its employees cost American taxpayers billions in welfare - but that is no different from many companies that pay employees poverty wages. As The Wall Street Journal recently pointed out, the American welfare system acts independently of any employer and Wal-Mart's wages are no worse than those paid by many other employers.
Opponents of Wal-Mart are mistaken if they think anything is going to change any time soon, and they are also mistaken if they believe it is the only company taking advantage of welfare in order to pay its employees less.
Until shopping habits change and better corporate citizenship is demanded by consumers, pile 'em high, sell 'em cheap and stash it abroad is going to remain a common corporate strategy. Wal-Mart might be lots of things, but a crook isn't one of them.
The Independent