My scholarship has focused, one way or another, on compliance issues--corporations that manipulate their income to avoid tax liability, practitioners who promote aggressive shelters and those who "customize" tax-motivated transactions for their clients. I am concerned that big corporations, and the tax practitioners that assist them in structuring their transactions, have so thoroughly adopted the "tax minimization norm" that they have lost sight of their responsibilities to comply with the tax law--including, I would say, with the spirit of the tax law.
So I found very interesting the new information about Wal-Mart, reporting on Tax Prof yesterday, here, and its profitable state tax dodge--deducting rent that Wal-Mart pays to "captive REITs" (i.e., controlled real estate investment trusts) that are 99% owned by Wal-Mart. Add this to the other ways that Wal-Mart evades reasonable social responsibility for the giant corporate power that it wields.
By the way, doesn't this suggest that something needs to be done by Congress about the REIT world? REITs were supposedly invented to permit broad-based ownership in real estate assets by ordinary people who don't have the wherewithal to buy multimilliondollar real estate holdings. The idea of a REIT was pooling--lots of little owners could pool their money and do what wealthy individuals do in reaping real estate rewards. But the real estate world has found it much easier to let the little guys own a tiny percent of the business, and then hold the rest right where all the real estate has always been held--in the hands of those with lots of money. Wouldn't it be interesting if Congress would abolish these "captive REITS" by requiring all REITS to have fully distributed ownership, with no single shareholder owning more than 1% (using broad constructive ownership rules to attribute ownership)?
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