The first Cabela's retail store(sporting goods) opened in 1987.The second one opened in 1987.Both stores were in Nebraska. In 1998.they started an aggressive nationwide expansion drive. They picked Hamburg,P.A. as a destination store. It had a faux museum that enabled it to be a nonprofit. This setup guaranteed it wouldn't have to pay property taxes for the life of the store.It had a "museum quality" display of stuffed and mounted creatures and an aquarium with bass,trout and other native game fish. The town agreed to this tribute because they were afraid to lose the store to another town in another state. Cabela's played off each towns fears to get the subsidies granted by the highest bidder.They got $32 million from Hamburg.After getting the property taxes, they went after the sales taxes and also got them.This tribute amounted to $8,000 for each man,woman, and child in town.Cabela's sold the town the idea that consumers would come from the surrounding states to buy sporting goods at this location and generate business for the entire community.Communities are desperate for any type of large business to help their sagging economies.(manufacturing is offshore) This subsidy covered more than half the cost of the entire construction of the building in Hamburg.Mining local and state governments for tribute turned into a business lucrative for Cabela's,more than selling sporting goods.In three years after it had become a company with publicly traded stock,2004-2006,Cabela's earned $223.4 million in profits.On the 10 stores and several distribution centers it opened outside Nebraska in those years it made deals for subsidies worth at least $293.7 million,a third more than its reported profits.
Sam Walton practiced corporate socialism throughout his career. As much as he could,he put the public money to work for his benefit.Free land,long term leases below market rates,pocketing sales taxes,even getting workers trained at government expense were among the ways Wal-Mart took every dollar of welfare it could get. Walton had a particular fondness for government-sponsored industrial revenue bonds,which cost him less in interest charges than the corporate bonds the market economy uses to raise money.
In the previous decade,Wal-Mart has collected more than $52 billion in sales taxes from customers.It has been subsidised by the taxpayers by over a billion dollars to build their facilities around the country.Wal-Mart paid $4 billion in property taxes during the same period.This amounts to 25 cents out of each $100 dollars in sales.It is equivalent of someone making $50,000 and paying $120 a year in property taxes.
Wal-Mart earned greater profits (1.6 trillion)than it could produce on its own thanks to these forced payments.The tribute people were forced to pay,even if they never set foot in the stores,also meant they gave up some of their tax dollars that could have gone to schools,roads and parks.They have fewer tools to advance themselves and fewer amenities to enjoy life.
More from "Free Lunch" in the next blog.
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