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A Beleaguered Wal-Mart Sues A Broke Puerto Rico For "Astonishing" Tax Hike

Tyler Durden's picture




 

It’s always amusing when unforeseen circumstances conspire to bring two previously disparate stories together in one hilarious boondoggle. 

As regular readers are no doubt aware, Puerto Rico is broke. "Let us be clear: We have no cash left,” governor Alejandro Garcia Padilla told Congress last week, after the commonwealth used an absurd revenue clawback end-around to avoid defaulting on some $345 million in debt that came due on Tuesday. 

The island owes another $300 million on January 1st and what might this week’s payment so important was that of the $354 million coming due, around $273 million was GO debt, and defaulting on that would mean a cascade of ugly litigation. 

Of course the use of the clawback - which effectively allows the island to divert revenue earmarked for other bonds to GO debt repayments - is a bit like Greece tapping its IMF reserves to pay the IMF. That is, there’s a palpable sense of desperation here and the situation is going to get immeasurably worse without some manner of federal intervention. 

Ok, so that’s Puerto Rico. 

Regular readers are also no doubt aware that Wal-Mart has gotten itself into trouble this year after bowing to calls for increased wages for its lowest-paid employees. Those wage hikes (which are set to cost the retailer around $1.5 billion over two years) pinched margins, prompting the company to tighten the screws on suppliers with a series of measures that culminated in Wal-Mart demanding that its vendors pass on any savings they might have derived from the yuan deval. 

The company also learned that when you hike wages for some employees but not others, the wage hierarchy gets thrown out of whack prompting workers higher up the ladder to either quit, or demand more money to restore the compensation pecking order. 

Unable to cope and unable to squeeze anything else out of the supply chain without triggering a veritable vendor mutiny, Wal-Mart was forced to cut hours and then, to cut jobs at the Bentonville office. 

It all fell apart in October when the retailer slashed its guidance, triggering a harrowing decline in the stock. 

Well don’t look now, but a beleaguered Wal-Mart is suing a beleaguered Puerto Rico after the latter’s attempt to lift government revenue by raising taxes pushed the company's tax burden in the commonwealth to nearly 92% of net income.

As Bloomberg reports, “Puerto Rico’s Act 72-2015 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.” 

Wal-Mart “biggest private employer and hands over more sales tax to the island government than any other business,” Bloomberg continues, before noting that the company is “asking a federal judge to declare the new measure unconstitutional and block its enforcement.”

“The new levy raised the estimated cumulative income tax on Wal-Mart Puerto Rico Inc. to an astonishing and unsustainable 91.5% of its net income!”, the company exclaimed, in a complaint filed Friday in San Juan.

We're sure they'll be any number of amusing anecdotes to report once this case gets going, but for now we'll simply close by saying that if you work at a Wal-Mart in Puerto Rico, you probably shouldn't expect much in the way of wage gains from this point forward because apparently, the island is so broke that it now needs the company to turn over nearly all of its profits in order to make sure you have public services.

 

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Sun, 12/06/2015 - 19:02 | 6884844 44MagnumPrepper
44MagnumPrepper's picture

ALL HAIL NOPAT

Sun, 12/06/2015 - 19:03 | 6884848 Money Counterfeiter
Money Counterfeiter's picture

Close the MF down.

Sun, 12/06/2015 - 19:11 | 6884886 Pladizow
Pladizow's picture

Agreed, we don't need no PR?

Sun, 12/06/2015 - 19:33 | 6884993 philipat
philipat's picture

To be of any value, this story needs actual numbers. My guess would be that the ratio of tax to net income is so high because the ratio of net income to sales is so low. That would be because WM uses the usual tax avoidance schemes, including keeping manufacturing profits offshore and "Transfer Pricing" goods into PR at inflated prices from a tax haven to keep profits in PR low. I might be wrong but to be conclusive either way percentages don't hack it, it need numbers/

Sun, 12/06/2015 - 19:44 | 6885049 two hoots
two hoots's picture

A primer of how desperation will work in any country.   Imagine when it all falls apart and  the/all courts are not funded or cease to exist?   

Sun, 12/06/2015 - 20:18 | 6885197 kiwimail
kiwimail's picture

I  can't imagine that.  Things have been running smoothly all my life.  Someone will always buy government bonds and provide funding for the military, the welfare programs, the foreign aid.  I can't imagine a time when things  will change.  I mean, some of our senior politicians have been in office for decades and are working to improve and protect the American way of life.  Surely if we just raise taxes a bit more there will be enough money to keep the wheels turning!

Sun, 12/06/2015 - 19:58 | 6885107 SILVERGEDDON
SILVERGEDDON's picture

Tough shit, Walmart.

Terms of service are subject to change without notice.

Welcome to our world.

You multinational fuckers been doing the fucking for centuries.

Now, you are crying because the State wants a bigger piece of the action ?

What you get for laying down with thieves.

Shoulda just been straight with your staff and customers from day one.

Nobody's gonna cry for you, or defend you now.

Sun, 12/06/2015 - 20:10 | 6885159 Normalcy Bias
Normalcy Bias's picture

^^^THIS

It's just as the scumbag healthcare companies are learning the hard way with the Obamacare that they crammed down our throats. FUCK 'EM!

Sun, 12/06/2015 - 20:16 | 6885178 Pool Shark
Pool Shark's picture

 

 

If the 91.5% figure is accurate, expect WalMart to shutdown its stores in PR.

 

If the 91.5% figure is not accurate, then WalMart won't close its PR stores, and they can STFU...

Sun, 12/06/2015 - 20:40 | 6885281 nuubee
nuubee's picture

Not that multi-nationals need any defense by a peon, but why all the bile for Walmart when it was money printing that did this to them? Perennially unbalanced national budgets did this, not the multi-nationals. Again, not trying to defend them, they've got their own flavor of evil.

Sun, 12/06/2015 - 20:48 | 6885322 JLee2027
JLee2027's picture

Cleary the law the aimed right at Walmart as they are the only company it affects.  Close all the stores, immediately until the law is repealed. That would be my answer. The courts are useless.

Sun, 12/06/2015 - 21:14 | 6885463 tarabel
tarabel's picture

 

 

Absolutely, a narrowly tailored tax designed to affect only one entity. Crazy me, that doesn't seem to add up to equal protection under the law but rather plunder under color of law.

The people who are cheering this on will sing a different song when the new tax tailors come knocking on their door. But by then it will be too late. The best time to drown these schemes is when they are still infants. 

Sun, 12/06/2015 - 23:05 | 6885980 willwork4food
willwork4food's picture

Nobody's gonna cry for you, or defend you now.

 

Beatifully articulated.  +10

Sun, 12/06/2015 - 22:09 | 6885730 goldsansstandard
goldsansstandard's picture

donDon't blame the players, no matter how big they are. The problem is the game. Specifically, world wide fiat that does not self correct large, long lasting trade imbalances.
When gold was money, the inbalances were self correcting. Now, not so much.

Mon, 12/07/2015 - 03:19 | 6886673 August
August's picture

Without PR, the USA could lose control of the Panama Canal.

Sun, 12/06/2015 - 19:08 | 6884845 Francis Marx
Francis Marx's picture

Seems like something that will happen here once the vomit hits the fans in the not to distant future. remember, those in office will do what ever it takes to keep in power. They want their failed policies to live on. Their robbing will get even more intense.

Sun, 12/06/2015 - 20:11 | 6885160 MisterMousePotato
MisterMousePotato's picture

I am anticipating a point in time where real property taxes actually approach or exceed the sustainable rental value of properties. Thinking about New Jersey ... well, maybe we're closer than we think?

Sun, 12/06/2015 - 19:03 | 6884853 Blythes Master
Blythes Master's picture

HAHAHAHAHA

Wal-Mart has to pay taxes, whaaaaaaaa.

Sun, 12/06/2015 - 19:07 | 6884877 LetThemEatRand
LetThemEatRand's picture

So when Wal-Mart sues and says certain taxes are unconstitutional, it's not a crazy conspiracy theory that will land them in jail.  I'm starting to get this thing now....

Sun, 12/06/2015 - 19:35 | 6885005 Money_for_Nothing
Money_for_Nothing's picture

Bill of attainder.

Sun, 12/06/2015 - 19:43 | 6885044 robobbob
robobbob's picture

the sad part is that corporate taxes are one of the very few taxes that are constitutional

note to the nsa proof readers. while I dispute the validity of fed personal income tax, I am in no way requesting a visit from your collection group at 3AM. you can expect your check to continue to be mailed per quarter as usual.

schiff message received loud and clear

Sun, 12/06/2015 - 21:26 | 6885526 lincolnsteffens
lincolnsteffens's picture

Fine "em. Frivolous argument.

Sun, 12/06/2015 - 19:04 | 6884856 Smegley Wanxalot
Smegley Wanxalot's picture

Just stop importing anything to the island. No more toilet paper for you Puerto Ricans.

You wanna run the island like Venezuela, then wipe your asses with sagebrush.

 

Sun, 12/06/2015 - 19:29 | 6884974 bamawatson
bamawatson's picture

" wipe your asses with sagebrush "

ahh the vision.

thought provoking.

fascinating image.

Sun, 12/06/2015 - 20:17 | 6885187 grunk
grunk's picture

Or poison ivy.

Sun, 12/06/2015 - 19:36 | 6884857 SillySalesmanQu...
SillySalesmanQuestion's picture

Welcome to the CONfiscation Wally World!
Coming to more countries sooner, than later.

Sun, 12/06/2015 - 19:57 | 6885103 vollderlerby
vollderlerby's picture
Buy N Large has to pay taxes ....

 

Sun, 12/06/2015 - 19:05 | 6884863 NubianSundance
NubianSundance's picture

Perhaps Wal Mart could leave and let the local economy back.

Sun, 12/06/2015 - 19:08 | 6884882 LetsGetPhysical
LetsGetPhysical's picture

What local economy? Drugs & Hookers? I thought 90% of PR's were already living in the US anyways?

Sun, 12/06/2015 - 19:08 | 6884868 Normalcy Bias
Normalcy Bias's picture

Give Puerto Rico its independence!

Sun, 12/06/2015 - 19:40 | 6884889 yogibear
yogibear's picture

California and Illinois public unions would like to tax at 100%. It's for the children.

Socialism Suffocates business. 

Sun, 12/06/2015 - 19:06 | 6884871 prymythirdeye
prymythirdeye's picture

FYI - The IRS is a privately owned Puerto Rican trust.

https://mystrangemind.com/2006/08/irs-exposed-irs-is-privately-owned.html

 

Sun, 12/06/2015 - 19:46 | 6885056 robobbob
robobbob's picture

but are there any lawyers out there who would be willing to pursue this

Sun, 12/06/2015 - 20:25 | 6885152 prymythirdeye
prymythirdeye's picture

Most likely not.  I put this info out for those who are in active pursuit of the truth.  It is an important piece of the puzzle in this quest.  I was not surprised when I got to the bottom of what the IRS is all about but it definitely plugged up an important plot line of those "in charge."  Utmost respect and love for anyone and everyone who even has a small itch for finding out the truth about our existence.

Sun, 12/06/2015 - 21:33 | 6885571 lincolnsteffens
lincolnsteffens's picture

A private corporation on Federal territory. It is not part of the US Gov. it contracts with the gov. and has been given police and legal powers. Also known as an agent for the corporate government. From what I understand it misrepresents and obfuscates the tax codes for its own benefit.

Sun, 12/06/2015 - 20:43 | 6885296 blue51
blue51's picture

The link won't open. A warning instead. ??

Sun, 12/06/2015 - 21:02 | 6885382 Clycntct
Clycntct's picture

read the warning it's a expired certificate.

Open it in virtual space to protect yourself.

Sun, 12/06/2015 - 19:06 | 6884872 LetThemEatRand
LetThemEatRand's picture

1953:  "As goes GM, so goes the nation."

2015:  "As goes Wal-Mart, so goes the nation."

Tells you most everything you need to know.

Sun, 12/06/2015 - 19:21 | 6884936 Oldwood
Oldwood's picture

It just doesn't tell you WHY

Sun, 12/06/2015 - 19:08 | 6884879 CHoward
CHoward's picture

Puerto Rico should have just named this tax the "WalMart tax" so it wouldn't be so obvious who they were targeting [sarcasm].  Puerto Rico has an extremely bleak future.  I'm sure WalMart is losing more merchandise to pilferage/shop lifting to making it even worthwhile to stay open.  I'd just close my stores and be done with it.  Hell - share holders would probably applaud this move. 

Sun, 12/06/2015 - 19:09 | 6884884 orez65
orez65's picture

Shut down Walmart in Puert Rico.

Let them eat sh.t.

Give them independence and let them wake the hell up.

Sun, 12/06/2015 - 19:12 | 6884896 Yen Cross
Yen Cross's picture

 Is Walmart on the NEWLY resurrected EXIM Bank guaranteed loan list?

 Can I eat WMT trailmix, while flying on Boeing aircraft?

Sun, 12/06/2015 - 19:28 | 6884972 cheech_wizard
cheech_wizard's picture

The fact they resurrected that corporate trough really pissed me off.

 

Sun, 12/06/2015 - 19:37 | 6885015 Yen Cross
Yen Cross's picture

  Every TURD has a few "peanuts & corn" wrapped in it, so it can pass through the colon of both houses of legislation...

Sun, 12/06/2015 - 20:25 | 6885176 SmedleyButlersGhost
SmedleyButlersGhost's picture

OK I'm nobody but here is my story. I told my brother in NYC I was coming a few days before TDay and then we were going to VA to the other bros place.. Long story short - pair of 501 Levi's on Zappos - $40. Bloomingdales - $275 ( no shit) Wranglers in Wal Mart VA - $15. Also in VA - guns ammo - on the shelf. I live in fukville - wtf is going on?

We sighted in my 14 year old nephew's AR at 400 yds - God bless America

PS - no idea what that would cost in Sterling - haha

Sun, 12/06/2015 - 20:45 | 6885306 ThroxxOfVron
ThroxxOfVron's picture

IF you think the prices in P.R. are inflated to the point of gouging you should visit NYC.

Sun, 12/06/2015 - 19:13 | 6884900 northern vigor
northern vigor's picture

It's a Puerto Rico storie, why didn't Tyler put up the picture of the four good looking girls in the skimpy costumes?

 

Sun, 12/06/2015 - 20:32 | 6885251 grunk
grunk's picture

Got it covered.

Here they are:

http://madamenoire.com/420541/people-of-walmart/

Sun, 12/06/2015 - 20:40 | 6885285 blue51
blue51's picture

Grunk, that was cruel.

Sun, 12/06/2015 - 20:49 | 6885325 SmedleyButlersGhost
SmedleyButlersGhost's picture

Ouch - gonna take a lot of normal porn to erase that

Sun, 12/06/2015 - 20:34 | 6885259 JLM
JLM's picture

He did.  Check out the printer friendly version and see Frank.

Sun, 12/06/2015 - 19:17 | 6884920 VWAndy
VWAndy's picture

But WM is tbtf?

Sun, 12/06/2015 - 22:04 | 6885706 goldsansstandard
goldsansstandard's picture

WM is most certainly NotBTTF. They wanted to have their own bank and were thwarted at every turn. I think they finally might have gotten a little one.
They are not from the NYC axis, and leaders did not go to Harvard, Princeton, Yale, or NYU.
and most of all, goyum hicks.

Sun, 12/06/2015 - 19:18 | 6884924 yogibear
yogibear's picture

Illinois public union members shouting... "Raise the taxes!"

https://www.youtube.com/watch?v=rSh7WUK1GDc

Sun, 12/06/2015 - 19:32 | 6884991 are we there yet
are we there yet's picture

Puerto Rico's problem is too many of its citizens are Puerto Rican.

Sun, 12/06/2015 - 22:44 | 6885847 squid
squid's picture

America has the same problem no?

 

 

Tyler! Do you see how your site behaves when trying to answer the discussions section over wifi on a handphone? My phone has 4 cores running at 1.8GHz and this site still over loads it.

 

Tyler....my phone has 1000 times the computing power than NASA used to put Armstrong on the moon in 69 but just ONE of your webpages pulls it to its knees. There is WAY too much floating JAVA/HTML5 shit running on each and every page...unless you are on a desktop rig, you're fucked.

 

Tyler.....this sucks.

Squid

Mon, 12/07/2015 - 07:37 | 6886929 Arnold
Arnold's picture

Tablets are the future, there is no doubt  in my mind.

Pitiful , huh?

Sun, 12/06/2015 - 22:32 | 6885850 squid
squid's picture

America has the same problem no?

 

Squid

Sun, 12/06/2015 - 22:32 | 6885851 squid
squid's picture

America has the same problem no?

 

Squid

Sun, 12/06/2015 - 22:32 | 6885852 squid
squid's picture

America has the same problem no?

 

Squid

Sun, 12/06/2015 - 19:35 | 6885002 logicalman
logicalman's picture

The only sensible thing to do now is open another beer.

Pfffssst.

 

Mon, 12/07/2015 - 01:28 | 6886513 tenpanhandle
tenpanhandle's picture

Damn, I ran out of sense about an hour ago.

Sun, 12/06/2015 - 20:06 | 6885145 Canadian Made
Canadian Made's picture

Canadians  in WM arent as full figured as the Yanks, cant be too fat here, makes the igloos too crowded

Sun, 12/06/2015 - 20:07 | 6885148 rsnoble
rsnoble's picture

Fuck Walmart, serves them right.

They'll probably end up having huge plumbing problems lol.

Sun, 12/06/2015 - 20:09 | 6885151 grunk
grunk's picture

Bankers to Puerto Rico citizens:

GET OFF OUR ISLAND!

Sun, 12/06/2015 - 20:13 | 6885167 F em all but 6
F em all but 6's picture

Note to Walmart. You are fucked. Either close up shop or raise prices to offset the tax increase. $500 for a roll of toilet paper should do it. Make sure you customers know its th governments fault.

Sun, 12/06/2015 - 21:21 | 6885505 Oath_Keeper
Oath_Keeper's picture

Walmart should close. They could never make the citizens understand that it was the government that is responsible.

Sun, 12/06/2015 - 20:14 | 6885172 grunk
grunk's picture

WalMart spokesman:

Asset forfeiture is for the little people!

Mon, 12/07/2015 - 01:54 | 6885261 ThroxxOfVron
ThroxxOfVron's picture

Why only tax Wallmart?  

-Helping out some local ( politician and crony owned ) import companies and retail chains?

-Nudging a nice ( politician and crony owned ) WMT options/short along for the holidays?

 

Why not tax/tariff the entire import sector across the board instead of picking on one corporation headed by a family of billionaire Ameri-gringos?

 

I foresee some mild price increases on products sold at Wallmart in PR.

 

Although it would be funny as shit to see Wallmart close down absolutely everything related to Puerto Rico ( stop carrying ANY products offered by vendors that are produced or value-added in P.R. as well for good measure ) I just don't see it happening.

What will the politicians do if Wallmart just closes up shop and takes a nice little tax loss on the winding down of everything even remotely associated with P.R. ?  

Tax the next largest importer/retailer?

-After the next largest importer/retailer bails too: wash, rinse, repeat...until.. ?

 

IF it makes sense for P.R. to lay on the tariffs in order to fund .GOV services then why wouldn't other states or whole nations do so as well?

The entire US Federal Government has a rather large fiscal deficit and the US economy has a rather large trade deficit; both of which tariffs on ( foreign merchantilist government subsidized/dumped ) imports could mitigate...

Offshoring corporate profits for imports which are mostly cheap asian dumped goods and thus draining local capital seems to be as widespread a problem as the is the pyramiding of generational debts by politicians who promise to offset the corporate production arbitrages and capital drainage via 'wealth redistribution', 'social safety nets', etc.

 

I know, I know...  Offering solutions would be helpful.  

Ok.  Given.   Solutions...   Um, yeah...

1... Fastest possible.way for P.R. to make some tax money: tax the shit out of the Puerto Ricans atempting to escape payment of 'their fair share' of the existing debts of P.R. by abandoning P.R. for the Mainland US.  

Make it retroactive to the day P.R. became a US territory -and charge a high rate of interest for arrears!

2. Adobo tax.

3. Bergen County New Jersey level property taxes.

Sun, 12/06/2015 - 20:44 | 6885299 Make_Mine_A_Double
Make_Mine_A_Double's picture

I assume this will nail Costco as well - same profile as Walmart only better DC connections.

These guys will close their stores before they let PR set a precedent.

Sun, 12/06/2015 - 20:45 | 6885304 Faeriedust
Faeriedust's picture

LOL.  So now Wally World SUES because its taxes are suddenly "too high"?  Please see the world's tiniest violin playing My Heart Cries For You.  In what world does a citizen (I assume WalMart is a Citizen, since Santa Clara Co makes them a "Person") have standing to sue its "democratic" government (WalMart PR being apparently a separate corporate entity for tax purposes, that means that yes, it IS a citizen of PR for purposes of determining jurisdiction) for imposing a policy that it doesn't like?  If citizens actually had such rights, why, I'd have a half-dozen suits lined up against my state, county, and federal government.  Because obviously, they all have laws which unfairly disadvantage me in comparison to someone else, and they all take my money for dubious purposes.

But that's what "democracy" is supposed to be about.  If WalMart doesn't like what their government is doing, then they can vote them out of office, right?  Oh, that's right, corporations can't vote, they can only BUY votes; a lot more votes than I'll ever cast.

HAHAHAHAHA.  This whole story is just absolutely rich.  They can both win or both lose and we can all still laugh.

Sun, 12/06/2015 - 21:02 | 6885386 logicalman
logicalman's picture

I'm assuming you consume a decent amount of alcohol.

Just enough to stop your head exploding.

At least, that's my excuse!

 

Sun, 12/06/2015 - 21:36 | 6885582 Golden Showers
Golden Showers's picture

Please define "decent".

Sun, 12/06/2015 - 21:10 | 6885442 Dark Daze
Dark Daze's picture

Bleed you fuckers, bleed.

Sun, 12/06/2015 - 21:35 | 6885577 Golden Showers
Golden Showers's picture

Isn't the IRS located in Puerto Rico? Some kind of off-shore protectorate laundering money for the private owners of the Federal Reserve?

Irony? Rico suave? Rico, like the racketeering act? I love Lucy? Honey; I'm home!

Oh Rico, you're so fine... so fine you blow my mind... Hey, Rico!

Mon, 12/07/2015 - 05:55 | 6886830 Atomizer
Atomizer's picture

Yet, Walmart fought a $7,000 fine for the death of an employee during black Friday. Sick fucking people. 

Six Years Later, Walmart Still Hasn't Paid A $7,000 Fine For Black ...

 

Mon, 12/07/2015 - 07:35 | 6886926 tsuki
tsuki's picture

I see that Jon Stewart is stopping the halls of congress to get committment from the Freaks to pass a permanent 9/11 bill to help "America's Heroes", the first responders.  Good luck with that.  The puntwits are more concerned that the Walmart family may not be in the top ten richest persons' list. 

Mon, 12/07/2015 - 07:46 | 6886941 Last of the Mid...
Last of the Middle Class's picture

Jeez, what a mess. I would never EVER want wally world acting on my behalf! Those shit stores can't close fast enough as people turn to online ordering. So much more convenient and you don't have to stand in a line like a fucking criminal waiting for some half wit to decide to check you out.

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