Before I start, let me tell people who do not normally read my blog this: I do not shop at Wal-mart. I'm not a particular fan of their policies and hiring practices. I hate their stores because they are warehouse like and often very dark and dirty. But I choose to combat Wal-mart in the best possible way, I don't shop there.
But now there is a bill in Montana to tax retailers who do more than $20 Million in sales. Basically, the more successful you are the more you are going to have to pay. It takes aim squarely at Wal-mart, and to some extent Target and Costco, whose critics complain that they pay their workers so little that it is up to the public to subsidize the workers' meager wages.
Now my first take, two wrongs don't make a right. The real problem is that you expect everybody else to subsidize lower paid workers. If there is no social welfare then there is no problem. However, this is a very long topic in and of itself and I don't really wish to argue this point right now.
OK, so lets just take social welfare programs as a given. Is it a good idea to tax Wal-mart? The impetus behind this is to presumably help those who Wal-mart is underpaying. Does it really? Any economist will tell you that in truth, the effect is unknown. Take this scenario.
Faced with higher taxes Wal-mart does what any business does, it tries to maximize profit. Taxes always have some effect on behavior because it changes the relative cost of doing business. It will probably either
a) cut costs, most likely through wages and benefits since this is most businesses biggest and most flexible expense.
b) raise prices
Neither is good for the people the tax is trying to help. For those who hate Wal-mart and believe it is the devil, have you actually shopped at one? Do you see the people who go there? Most are struggling families who go to Wal-mart because its prices are so low it allows them to stretch their dollar that much farther. Raise prices and you directly hurt those who need it the most.
I am sure there will now be arguments that Wal-mart created this class in the first place by paying their workers so little that they can only afford to shop at their stores. Take a good look. Wal-mart is huge; millions and millions of people shop there, much more than are employed by Wal-mart. But that isn't even the point. Even if Wal-mart created this class I have less of a problem with that than the government fixing the problem through taxation. I have to agree with the Wal-Mart spokesman, government should not pick winners and losers in business. If you allow government to pick on the biggest kid on the block, what is next? What is to stop them from taxing the 2nd biggest kid, and then the 3rd? As soon as #1 is taxed into oblivion and #2 becomes #1 what happens then?
So lets stop Wal-mart the right way. STOP SHOPPING THERE! Tell your friends, spread the word. Evangelisize Target. Lets just not do it by having government do the dirty work.