Report · June 4, 2014

New Report Reveals Walmart Cut Its Taxes by $104 Million by Giving Executives Lavish “Performance-Based” Bonuses

WASHINGTON – Americans for Tax Fairness (ATF) and the Institute for Policy Studies (IPS) today released a report revealing that Walmart received $104 million in taxpayer subsidies over a six-year period due to tax deductions for “performance-based” executive compensation. During that time, eight top executives pocketed more than $298 million in “performance pay” that was fully tax deductible.

The release of the report comes just days before Walmart’s annual shareholder meeting Friday, June 6.

The study shows that Walmart was able to lower its federal tax payments by $40 million because of lavish pay packages awarded to just one executive — recently retired CEO Michael Duke. Duke pocketed $116 million in stock options and other performance-based compensation between 2009 and 2014.

The report, Walmart’s Executive Bonuses Cost Taxpayers Millions, finds that Walmart’s $104 million in tax savings was made possible by a loophole in U.S. tax law that allows companies to deduct unlimited amounts for performance-based compensation. The origin of this loophole was a 1993 reform intended to discourage excessive executive compensation by capping the amount corporations can deduct from their income taxes for executive pay at no more than $1 million per executive. But the law opened a massive loophole by exempting stock options and other so-called “performance pay” from the cap.

“When Walmart gets a $104 million tax break for giving its executives outrageous pay packages, the rest of us pick up the tab,” said Frank Clemente, executive director at Americans for Tax Fairness. “With this tax loophole, the bigger the executive bonuses the less Walmart pays in taxes. This is truly one of the most perverse loopholes of all time.”

“Subsidies for executive bonuses come at a huge social cost,” said Sarah Anderson, Global Economy Project Director at the Institute for Policy Studies. “The $104 million in tax subsidies for Walmart’s executive pay over the past six years would have been enough, for example, to cover the cost of providing free lunches for 33,000 children. What’s even more outrageous is that this is a company that pays its workers so little that many of them must rely on such public assistance programs.”

“When large corporations pay multimillion dollar bonuses to executives subsidized by taxpayers, then small businesses and families must pay more,” said Rep. Lloyd Doggett (D-TX), author of a bill in the U.S. House of Representatives that would close the CEO loophole, the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (H.R. 3970). “Publicly-held companies like Walmart can continue paying their executives multimillion dollar bonuses; just don’t expect the American taxpayer to pick up your tab. It makes no sense for working families to subsidize those making nearly 300 times the average worker.”

“While worker incomes stagnate and CEO pay is reaching new heights, the tax code should not be subsidizing runaway executive compensation,” said Sen. Richard Blumenthal (D-CT), who joined Sen. Jack Reed (D-RI) in introducing in the U.S. Senate the Stop Subsidizing Multimillion Dollar Corporate Bonuses Act (S. 1476). “Companies do not deserve needless tax breaks and giveaways for lavish pay to their executives. Instead, the nation must invest in creating jobs and rebuilding a strong middle class. I will continue fighting to end this wasteful loophole.”

The joint ATF-IPS report follows recent work on related issues by both organizations—Walmart on Tax Day: How Taxpayers Subsidize America’s Biggest Employer and Richest Family (April 2014) by Americans for Tax Fairness, and Restaurant Industry Pay: Taxpayers’ Double Burden(April 2014) by the Institute for Policy Studies.


Americans for Tax Fairness is a diverse coalition of 400 national and state organizations that collectively represent tens of millions of members. The organization was formed on the belief that the country needs comprehensive, progressive tax reform that results in greater revenue to meet our growing needs. ATF is playing a central role in Washington and in the states on federal tax-reform issues.

The Institute for Policy Studies is a 50-year-old multi-issue research center that has conducted path-breaking research on executive compensation for 20 years. A May 2013 IPS report, ‘Fix the Debt’ CEOs Enjoy Taxpayer-Subsidized Pay, was the first to put a price tag on the tax subsidies specific corporations have enjoyed from the “performance pay” loophole.