Walmart Sues Puerto Rico

As though Puerto Rico didn’t have enough trouble, Walmart is suing Puerto Rico.

Walmart is the top retailer in the United States (Amazon actually sells more but is only an internet seller and Walmart is the largest retailer with actual stores).  It is also the largest retailer in the world.  And it is also the top retailer in Puerto Rico, with 55 stores under a handful of different names.

Government is the largest employer in the territory, but Walmart is the largest private employer, and pays some $100 million in sales tax to the Government of Puerto Rico each year.  According to Walmart’s corporate website, it employs 10,000 people, but other estimates put the number closer to 15,000.  Each year, the Puerto Rico stores also donate $4.6 million locally.

Puerto Rico is plagued by underemployment, and the government of the territory is in grave need of money.  Some commenters estimate that the Government of Puerto Rico does not receive 44% of the high 11.5% sales tax.  One would think that the government would be very happy to have Walmart’s contributions.

Instead, Puerto Rico passed a special law, Act 72-2015, which Walmart says will bring the taxes it has to pay to 91.5% of its net income.  Bloomberg describes Act 72-2015 like this: “increases to 6.5 percent from 2 percent the tax on goods imported from offshore affiliates to local companies with gross revenues of more than $2.75 billion.”

There is only one company in Puerto Rico with revenues over $2.75 billion, so this is a law designed especially for Walmart.

Walmart has filed suit against the tax in Federal Court.

Walmart could win, since creating a law that applies to just one company can be considered discrimination.  If it loses, Walmart says, it might shut down its stores in Puerto Rico.  Puerto Rico would lose the $100 million in sales taxes, as well as the 10,000-15,000 jobs and the $4.6 million in donations.

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