Wal-Mart tax exemplifies `tyranny of the majority'

January 26, 2005|By JAY HANCOCK

ENGLISH philosopher John Stuart Mill warned about the "tyranny of the majority" in a democracy.

What worried him will probably be on display today at an Annapolis news conference with Baltimore Mayor Martin O'Malley, Montgomery County Executive Douglas M. Duncan and officials of Giant Food, the grocery chain.

They'll endorse a huge new state tax on Wal-Mart -- and only Wal-Mart -- to help pay for Marylanders who lack health insurance. Proposed by the Maryland Citizens' Health Initiative, the concept is also backed by the Greater Washington Board of Trade.

They don't call it a Wal-Mart tax; it's a "health measure" to encourage "large businesses" to offer coverage. But that's what it is, a surgical attack on one company, a beautiful confluence of raw politics, good intentions and one corporation waging business by other means (legislation) against a rival.

How could Wal-Mart become the sole punching bag of a fellow retailer, the leaders of two of the state's biggest jurisdictions and a prominent business group? Maybe only in Maryland. Follow closely.

A hot issue in Montgomery County, an affluent Washington suburb, is whether Wal-Mart can build huge "supercenters" that would sell groceries and hurt Giant.

Duncan backed county land-use legislation to restrict supercenters. Duncan also wants to be governor. So does O'Malley, so he has to join the act. Both want support from Giant, whose unionized work force and generous benefits hinder it from competing on price with Wal-Mart, which offers meager benefits.

Voila: The Wal-Mart tax, a response to Maryland's health-care crisis that would impose a large burden on exactly one Maryland taxpayer.

Supporters deny they're ganging up.

"That is a coincidence" that Wal-Mart is the only company affected by the proposal, says Vincent DeMarco, president of the Maryland Citizens' Health Initiative.

And what a coincidence. Purely by chance, the tax's only target is a company that doesn't give much to Maryland politicians, has crossed paths with a gubernatorial hopeful and is enemy No. 1 among retail unions. Life sure is funny.

No General Assembly bill has been introduced. But as proposed by DeMarco and endorsed by O'Malley & Co., all companies with 10,000 or more Maryland employees would pay the tax unless they spend at least 8 percent of their payroll on medical benefits.

There are two companies with more than 10,000 Maryland employees. One is Giant, which spends more than 23 percent of its payroll on health care, says spokesman Barry Scher, making it immune to the tax. The other is Wal-Mart, which spends either 3 percent or 5 percent (accounts vary; a Wal-Mart spokesman didn't know), exposing it to the tax.

The Wal-Mart tax would equal 8 percent of payroll minus whatever it already spends on health care. A similar tax on most Maryland companies failed last year. Now proponents have culled Wal-Mart from the herd and closed in.

Backers of the measure go on about Wal-Mart's skimpy benefits, the thousands of uninsured Marylanders and the burdens imposed by Wal-Mart on taxpayers and other employers.

No argument here. I'm not disputing the problem. I'm disputing the solution.

A spokesman says Wal-Mart offers medical coverage to full-time workers after six months and part-timers after two years, with monthly premiums as low as $40 for an individual policy with a $1,000 deductible. But often workers reject coverage -- critics say Wal-Mart's poor wages make them unable to afford it -- costing government millions when they turn to Medicaid and other government programs.

Last week the Chattanooga Times Free Press reported that 9,617 Wal-Mart employees received benefits from TennCare, Tennessee's expanded Medicaid program. One conclusion is that Tennessee taxpayers are massively subsidizing Wal-Mart shoppers and shareholders. The subsidization is probably even broader in Maryland, where not just taxpayers but employers such as Giant pay for the medically indigent via the hospital rates charged for insured employees. So Giant makes a good argument.

But Wal-Mart's benefits aren't any worse than those of hundreds of other employers. Don't single it out because it's a big target. One-company taxes are as bad as one-company tax breaks.

You want to revisit a tax on broad categories of employers that offer poor coverage? Fine. Raise the minimum wage so workers at Wal-Mart and other companies can better afford care? Terrific. Talk about universal health care? Sure.

But don't assault one corporate citizen and call it "fair." That's schoolyard bullying, not public policy.

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