Earnings Taxes and Wal-Mart
Today’s announcement by Wal-Mart got me thinking about this study by the Show-Me Institute. Wal-Mart is opening 9 new stores in economically depressed areas around the country. Did local earning’s taxes have an effect on where Wal-Mart chose to locate? Here is am important nugget from the report:
East Hills, Pennsylvania, is a community just outside of Pittsburgh.
So Wal-Mart is locating just outside of Pittsburgh. What does Pittsburgh have that East Hills almost certainly does not? Besides the Steelers and Pirates…An Earnings Tax of 1%. On the other hand, Wal-Mart is locating within the city limits of Indianapolis which has an earnings tax, although at 0.7% it is the lowest such tax in the country. Wal-Mart appears to have located new stores in suburbs just outside of major cities, such as Atlanta, San Francisco and Washington, DC. While those last three cities do not have earnings taxes, they very likely do have higher taxes in general than the chosen suburbs outside them.
Wal-Mart is also opening a store that appears to be within the city limits of Cleveland, which has a high earnings tax of 2%. However, the new Cleveland store appears to be a part of a major revitalisation project, Steelyard Commons, which likely has substantial tax incentives that would offset the earnings tax. Chicago, the other major site for a new Wal-Mart within municipal limits, does not have any earnings tax.
The final store count is two out of nine in cities with earnings taxes. One in a large city without an earnings tax. Three in suburbs without earnings taxes located just outside major cities, and three in more distant suburban areas without earnings taxes. I must conclude that earnings and other local taxes were a significant, but not the decisive, factor in where Wal-Mart has chosen to open these new stores.