A Court of Appeals in California has ruled invalid a $2 million tax subsidy given to Wal-Mart by the Chula Vista Redevelopment Agency. A lower court had already ruled that the redevelopment agency violated state law in offering the tax break to the world’s richest retailer. The city agency had agreed to buy 13 acres of vacant land for $5.2 million, and then sell it to Wal-Mart for $3.35 million. Wal-Mart would pay the full price at first, but then get back $1.9 million from sales and use taxes received from the operation of their store. Two Chula Vista taxpayers this “land write-down” form of corporate welfare, and the courts agreed. The CA legislature passed a law prohibiting redevelopment agencies from providing any form of direct assistance to projects of 5 acres or more which had not been previously used for urban use. Wal-Mart tried to argue that because a lumber company had at one time stored lumber on part of the site that it was “developed”. The court rejected Wal-Mart’s arguments. The whole incident came about because Wal-Mart told the redevelopment agency that it was not financially feasible for them to buy the land at market price. The Chula Vista Wal-Mart is already built, but the $2 million taxpayer subsidy has been stopped by two citizens who blew the whistle.
Watch for corporate welfare in your hometown. The world’s largest retailer doesn’t need tax giveways to survive.