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Loophole Inc.: A special report on Florida's corporate income tax

The state loses more than $1-billion a year in exceptions to its corporate income tax. Ninety-eight percent of businesses pay nothing.

By SYDNEY P. FREEDBERG, Times Staff Writer
Published October 26, 2003

How businesses shave their Florida tax bills
The vast majority of the state’s businesses are not required to pay the Florida corporate income tax. Many of the rest find ways to cut their tax bills substantially.
[Photo by Andy Newman/
Carnival Cruise Lines]
2002 Sales: $4.37-billion.
2002 pre-tax income: $959.4-million.
Net income: $1.02-billion.
Florida corporate tax payment: $0.
Tax loophole/strategy: Incorporate in Panama.

[Times photo: 2000]
2002 Sales: $67.63-billion.
2002 pre-tax income: $6.2-billion.
Net income: $4.08-billion.
Florida corporate tax payment: $0.
Tax loophole/strategy: Utilize deductions and new accounting rules.

[Times photo: Lance A. Rothstein]
2002 Sales: $38.5-million.
2002 pre-tax income: $124,000*.
Net income: $123,716.
Florida corporate tax payment: $0.
Tax loophole/strategy: Reorganize the company.

[Times photo]
(year ended FEB. 1, 2003)
2002 Sales: $11.31-billion.
2002 pre-tax income: $361-million.
Net income: $229-million.
Florida corporate tax: Declines to reveal**
Tax loophole/strategy: Set up a Delaware subsidiary.

* Saddlebrook is a privately held company whose earnings flow through to the owners. Several of those main owners, Thomas L. Dempsey, two daughters and a son-in-law, last year took home $689,000 in salary and other compensation, free of personal state income tax since Florida does not impose one.
** Although Toys “R” Us declined to give a state-by-state breakout of its corporate income tax payments, it does report a lump-sum total to the Securities and Exchange Commission. Sources: Company reports filed with Securities and Exchange Commission.

[Times photo: Dirk Shadd]
2002 Sales: $3.55-billion.
2002 pre-tax income: $44.8-million.
Net income: $34.7-million.
Florida corporate tax: Declines to reveal***
Tax loophole/strategy: Shift jobs to China, Hungary and Malaysia.

[Times files: 2000]
2002 Sales: $12.33-billion.
2002 pre-tax income: $308.2-million.
Net income: $89.2-million.
Florida corporate tax: Declines to reveal***
Tax strategy: Buy insurance on employees; make company sole beneficiary

[Times photo: James Borchuck]
(year ended Jan. 31, 2003)
2002 Sales: $244.52-billion.
2002 pre-tax income: $12.72-billion.
Net income: $8-billion.
Florida corporate tax: Declines to reveal***
Tax loophole/strategy: Use economic-development tax credits.

*** Although these companies declined to give a state-by-state breakout of their corporate income tax payments, they do report a lump-sum total to the Securities and Exchange Commission. Sources: Company reports filed with Securities and Exchange Commission.
The series:
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Carnival Corp., Florida's 10th-largest public company with 4,220 South Florida employees and a $136-million state payroll, posted more than $1-billion in profits last year.

It also paid nothing in Florida corporate income tax.

Neither did Verizon Communications Inc., the phone giant that employs 12,500 people in Florida, or Saddlebrook Resorts Inc., the elite retreat in Wesley Chapel that is home to a famous tennis training center.

In fact, 98 percent of the estimated 1.5-million businesses in Florida paid nothing. And many of those that did pay found ways to reduce their tax bills.

At a time when Florida is scraping for every dollar to improve education, build roads and prisons and buy prescription drugs for the poor, Florida's corporate income tax is all but dead.

Consider this:

** Corporate income tax collections as a percentage of state tax revenue are at their lowest point since 1972-73.

** In 2001, Florida lost a larger percentage of revenue because of questionable tax shelters than all but two of the 45 states that impose a corporate income tax, according to a recent study.

** The system is increasingly inequitable for businesses, with just 5,000 companies paying almost all of the tax.

** As the corporate tax percentage declines, the state's reliance on the sales tax - which hits the poorest Floridians five times harder than the richest - is growing.

** By one state estimate, legal exemptions, credits, deductions and loopholes cost Florida $1.2-billion a year - more than the corporate tax generates.

In a state with a $53.5-billion budget, $1.2-billion would be enough to hire 28,000 teachers or build 3,500 classrooms or bring teachers' salaries in line with the national average.

It would be enough to build 30,000 prison beds or 425 miles of two-lane roads. Or enough to provide prescription drug coverage for 50,000 seniors for more than a decade.

How do so many businesses pay so little or nothing? The answer is aggressive tax planning, a state tax code full of loopholes and politicians unwilling to plug them.

"The benign explanation ... is there are a lot of corporations in Florida with no profits," said Richard Pomp, a tax professor at the University of Connecticut Law School and author of a book on state taxation. "The real explanation is that the corporate tax has become a voluntary tax. The Legislature doesn't control it. The (state) tax department doesn't control it. Accountants and lawyers control it."

Around the country, corporate contributions to state revenue have been falling as states grapple with severe budget problems.

But while some states seek to close loopholes and target corporate tax avoiders, Florida has done nothing.

Instead, talk of tax reform here invariably centers on the sales tax, which generates more than 72 percent of the state's tax revenue.

Several times in recent years, attempts to eliminate some of the hundreds of exemptions to the sales tax have failed in the Legislature, which bowed to the wishes of businesses that benefit from those tax breaks.

Sen. Walter "Skip" Campbell, D-Tamarac, chairman of the Senate Finance and Taxation Committee, said he plans to examine corporate income tax loopholes next year and determine why the tax is fading as a source of state revenue.

"It's a moral issue," Campbell said, acknowledging that corporate tax reform stands little chance.

"The Legislature doesn't have the guts to stand up to corporations and say, "Come on, contribute.' "

A "fair share'

When then-Gov. Reubin Askew persuaded the state's voters and Legislature to enact the corporate income tax in 1971, "contribute" was a word he used repeatedly.

It was time, he said, for businesses in Florida to "contribute their fair share" to the state's tax base.

That share has never been very large, however.

First, Florida has a low corporate income tax rate - a flat 5.5 percent of a company's net income in the state. (By comparison, Georgia's rate is 6 percent; North Carolina's, 6.9 percent; and California's, 8.84 percent.)

Second, the rules are very favorable to businesses, essentially allowing them to slash their taxable income down to little or nothing.

Moreover, the tax was designed so that 5,000 of the largest corporations in Florida would pay 90 percent of the revenue.

Today, it's even more selective: In 2001, just 5,303 companies paid 98 percent of the tax.

The loopholes are so gaping that an estimated 1.3-million businesses in Florida are not even required to file a corporate income tax return, much less pay the tax. And almost 90 percent of the businesses that do file returns pay nothing.

Gov. Jeb Bush declined to respond directly to questions about Florida's tax policy. But administration officials defended the system, saying that corporate tax collections are more than projected.

They noted that the state has had far fewer financial problems than higher-tax states such as California, and they attributed the growing number of no-paying and low-paying businesses to a number of factors: a weak economy, federal tax policy and state efforts to foster a low-tax, corporate friendly culture that encourages job growth.

"There's a good side to it," said Jim Zingale, executive director of the Department of Revenue. "We appear to have a strong business climate today that we didn't have in past recessions."

State officials also stressed that many of the zero-paying businesses are small. And even if businesses don't pay a corporate tax, they usually pay property, unemployment, sales and use taxes as well as annual filing fees. They employ tens of thousands of Floridians who also pay sales and property taxes.

Proponents of Florida's system cite a recent study by the Council on State Taxation, a trade group representing 550 large corporations. It found that corporate income taxes nationally accounted for less than 8 percent of all the state and local taxes businesses paid last year. When other taxes were totaled, researchers concluded that corporate America paid its fair share - and more.

While Florida statistics were not made public, the council said results of the national study "give lie to the assertion made by some that business nationwide pays "little' in state and local taxes."

Bush administration officials also argue that the low-tax culture is a key reason Florida continues to create jobs.

Another cause for the corporate tax's decline: Accountants have become more aggressive in their attempts to reduce state corporate income taxes.

"A company like Microsoft, Exxon or GM will employ a large number of people whose job it is to find every tax loophole that exists and take advantage of them," said Larry Fuchs, who led the state Department of Revenue from November 1992 until January 2000. "It's our fault we allow it to continue by allowing the loopholes to continue."

For their part, businesses say they have a duty to seek any legal way to cut their tax bills.

"A lot of our shareholders rely on that stock to live their daily lives," said Bob Elek, spokesman for Verizon. "Obviously, we are going to position ourselves the best way we can from a tax perspective."

Despite pretax earnings of more than $6-billion, the phone giant is one of just a few companies to acknowledge it paid zero in Florida corporate income taxes last year.

Why? Because it legally delayed paying more than $1.6-billion in taxes on capital investments it made and because accounting rules forced the company to "write off" $4-billion after some subsidiaries performed poorly.

"It was a very unusual year ... a fluke," Elek said, adding that Verizon "always pays its fair share of taxes." No. 10 on the Fortune 500, the company paid $27-million in other state and local taxes and projects a Florida income tax payment of between $8-million and $10-million this year, Elek said.

"We don't create the rules; we just live by them," he said.

"No rational basis'

Critics say those rules are cockeyed.

Today, only about 240,000 companies - less than 20 percent of all the businesses in Florida - are required to file corporate income tax returns.

The remaining 1.3-million businesses escape the tax simply because of the way they are organized.

An estimated 800,000 of them are sole proprietorships, single-owner businesses that are not incorporated. Typically, they are the smallest entrepreneurs, such as yard men, real estate agents or freelance writers. Many experts say taxing them would not yield much additional revenue.

A growing number are "flow-through entities" - so called because their earnings flow directly to the people who own the businesses. They can avoid the tax because federal law allows it and Florida's tax code conforms closely to federal rules.

Congress began enacting flow-through provisions decades ago to allow business owners to escape paying taxes twice - once on their business profits and once as part of their personal income. A flow-through business, unlike a regular corporation, is taxed only once, on its owners' personal income tax returns.

But since Florida has no personal income tax, the profits escape state taxation. That costs the state $759-million a year in possible revenue.

Of the estimated 488,000 flow-through businesses in Florida:

** About 78,000 are partnerships, unincorporated businesses that two or more people own.

** About 38,000 are limited liability companies, a type of business that did not exist when the Florida tax began in 1972. Lawyers and other professionals often use such businesses to get protection from lawsuits, just like owners of regular corporations. But many limited liability companies are not taxed twice, like corporations; they are taxed only once.

** An estimated 372,000 are Subchapter S corporations, named after a section of the Internal Revenue Code. An S corporation can have up to 75 shareholders who report income on their personal tax returns. Some are multimillion-dollar businesses.

When a Florida commission studied the tax system in 1991-92, it was baffled by the way some businesses had to pay the corporate income tax while others got off scot-free. "There is no rational basis" for it, the commission concluded, adding that more than 40,000 businesses may have reorganized as Subchapter S corporations, in part to avoid paying the corporate tax.

Saddlebrook Resorts, a 480-acre golf and tennis complex in south-central Pasco County, made the switch in February 1990.

Saddlebrook is home to celebrities, 45 tennis courts, an Arnold Palmer golf academy and assorted deluxe accommodations and conventions.

A family enterprise with 710 employees and revenues of $38.5-million last year, Saddlebrook paid no state or federal income tax because of its S corporation status.

It reported net earnings of $123,716 last year, down from $3.38-million in 2001. It attributed the earnings slide to the post-Sept. 11 slump in tourism.

Saddlebrook chief executive Thomas L. Dempsey, 77, said the company is heavily taxed. "We're paying personal (federal) income tax at the maximum level," he said. "Plus we pay property tax. We have a (local) tourist tax. We're one of the biggest taxpayers in the county, and if you're asking should we have another tax, hell no."

For years, the most striking example of a wealthy S corporation was Alamo Rent A Car.

Until it was bought by another company in 1996 and lost its Subchapter S status, Alamo raked in tens of millions - and never paid a penny in Florida corporate income tax.

In 1993, then-Gov. Lawton Chiles tried to extend the corporate income tax to S corporations like Alamo, but the effort failed.

"Even when the Democrats were in power, the business interests were powerful lobbies," said Dexter Douglass, Chiles' onetime general counsel. "They're more powerful now than they've ever been."

Elsewhere, states are trying to close flow-through loopholes. At least 10 states impose some type of tax on S corporations and partnerships.

Last year, New Jersey joined a number of states in charging limited liability companies. Now they pay a fee based on the number of partners for any firm with two or more partners. The fee is $150 per person with a cap of $250,000.

Deferrals and deductions

Florida's Department of Revenue said it does not keep a list of businesses that are exempt from filing returns. Citing confidentiality laws, it also refused to identify the 213,000 businesses that filed returns but paid no income tax in 2001.

The federal government makes public companies report some tax information, but most big firms disclose state income tax payments in a lump sum and refuse to break them down by state.

Documents that are available, however, suggest that many multistate firms operating in Florida find ways to reduce their state tax bills.

Many of the tax-saving maneuvers are perfectly legal; others are questionable and possibly illegal.

The most common way large corporations cut their taxes is by taking advantage of an array of legal allowances, exclusions, deferrals, credits and deductions in both the federal and state corporate tax codes.

Consider "bonus depreciation," a deduction used by many companies, including Verizon and Miami-based Ryder System (which also paid very little in state income taxes last year).

Bonus depreciation, at the heart of last year's federal tax cuts, changed the way businesses write off, or depreciate, their investments. That can dramatically reduce their taxes.

Last year, they could take an immediate 30 percent deduction (in addition to the normal deduction) for new equipment purchased between 2001 and 2004. This year, the deduction was upped to 50 percent.

Although Congress saw it as a way to jump-start the shaky economy, critics call bonus depreciation a hidden corporate subsidy that distorts economic reality. That's because companies can depreciate the wear and tear on new equipment far faster than the equipment actually wears out.

"It's the way accounting rules work," Elek said, adding that Verizon spent at least $12-billion on capital improvements last year, including $241-million in Florida.

Whenever Congress passes a new tax law, each state has the chance to decide whether to conform.

At least two dozen states, including Georgia, South Carolina, Tennessee and Virginia, elected not to follow the federal bonus depreciation rules because they would cost too much.

Not Florida. Gov. Bush and the Legislature embraced the rules as part of what the administration called "Florida's sensible tax structure."

At the time, state budget planners estimated the rules would drive down corporate tax collections by more than $200-million in the first year alone. Now, they say the tax revenue loss was far less, though they don't have final numbers yet.

Another company that took advantage of bonus depreciation is the privately held Times Holding Co. & Subsidiaries, a unit of the tax-exempt Poynter Institute for Media Studies that owns the St. Petersburg Times.

Last year, the company reported $275.8-million in net sales and $12.3-million in federal taxable income. It took $263.5-million in federal deductions for expenses that ranged from depreciation and advertising to commissions and consulting fees.

After additions and subtractions allowed by Florida law, the Times paid $573,706 in state income taxes. That put the paper in the top 8 percent of corporate taxpayers.

"I don't know if I should feel virtuous or like a chump," said Paul Tash, the Times' editor and president.

Shifting jobs abroad

Some Florida-based businesses legally shield some of their income by moving jobs abroad.

U.S. businesses don't have to pay tax on foreign earnings until the money is sent back to the United States. As a result, multinational companies are increasingly delaying taxes, sometimes indefinitely, by reinvesting foreign income overseas.

At the same time, they sometimes pay lower rates abroad.

Last year, St. Petersburg-based Jabil Circuit Inc., a maker of circuit boards and other electronics parts, said it made $44.8-million in pretax earnings. It received a $1.3-million tax refund from the states in which it does business. It wouldn't say how much, if any, came from Florida.

"We pay our taxes where we make our income, and a lot of our business is operated outside the U.S.," said Chris Lewis, Jabil's chief financial officer. "If we were 100 percent U.S.-based, we'd be paying higher taxes. ... Our operations are not as big in Florida as they were a couple of years ago."

Jabil, Florida's 11th largest public company, once had more than 3,000 Tampa Bay area workers. Now it has about 1,500, and as its payroll falls, so do its state income tax payments.

Where is Jabil growing? In places like Malaysia, China and Hungary, where federal documents show the company enjoys "tax holidays" through 2010.

Incorporating overseas

Much of the cruise ship industry has long enjoyed another type of legal income tax holiday.

While cruise giants Carnival and Royal Caribbean Cruises Ltd. manage their businesses in South Florida, they are incorporated overseas. As a result, they can use a loophole exempting international transportation operations from paying U.S. income taxes.

"Because the companies don't pay federal corporate income tax, they aren't subject to Florida corporate income tax either," said Department of Revenue spokesman Dave Bruns.

Carnival, which carried more than 2-million passengers from Florida ports last year, is one of the state's most influential companies. Yet it pays no Florida income tax and practically no federal income tax because it is headquartered in Panama. It doesn't have a single employee there.

Carnival said at least two of its subsidiaries pay income tax to Florida.

Royal Caribbean, with 2,200 South Florida employees and $3.4-billion in national sales, employs a similar strategy. It is incorporated in Liberia; it pays little or nothing in U.S. and Florida corporate income tax.

"We are not a United States corporation," Royal Caribbean said in a report filed with the Securities and Exchange Commission.

Congress enacted the tax break decades ago to help corporations avoid multiple taxation in different countries. Because Florida follows the federal tax code, the state never closed the loophole for cruise lines, which have poured millions into federal and state political campaigns.

"Florida gives cruise ships a free ride," said professor Pomp.

In June, Carnival's shareholders voted down a labor group's proposal that the company end its Panama connection and incorporate in the United States.

That would have led to a "very significant decrease in Carnival Corporation's after-tax income," the cruise line said.

"Even though these cruise companies are not U.S. companies and under the tax exemption ... pay no corporate income tax, their contribution to the Florida economy is significant," said Carnival spokesman Tim Gallagher. He added that Carnival pays more than 100 types of user fees and assessments across the United States.

Royal Caribbean said it, too, contributes plenty, but neither cruise line would disclose how much it pays in other state and local taxes.

Department of Revenue officials said the Legislature is aware of the loophole. "No legislation has been filed on it," Bruns said.

Questionable tax shelters

The Multistate Tax Commission, a nonpartisan group of state taxing authorities, recently found that tax shelters cost Florida more than $500-million in 2001.

According to the commission's report, Florida had the third greatest revenue loss, measured against corporate tax collections, of any of the 45 states with a corporate income tax.

While the rules are murky, shelters are usually deemed illegal when they involve convoluted transactions that have no economic purpose beyond avoiding taxes.

For example, some multistate firms shift income from Florida and elsewhere into states that do not tax intangible profits, such as trademarks and patents. The most popular destinations: Nevada, Michigan and Delaware.

In one famous case, Toys "R" Us set up a Delaware subsidiary called Geoffrey Inc., named after the company's Geoffrey giraffe. Then, according to South Carolina revenue officials, the toy chain had its stores pay Geoffrey for the right to use the Toys "R" Us name. Thus, it moved millions in income from states where it did business to the Geoffrey shelter in Delaware, where income from trademarks is not taxed.

Around the country, state revenue officials have challenged similar tax-savings strategies used by dozens of corporate giants.

The companies all deny they flouted tax laws, saying they have plenty of nontax reasons (such as efficiency and convenience) to set up Delaware subsidiaries.

States' efforts to ban the use of the shelters have had varying degrees of success. A Maryland court recently ruled that some Delaware holding companies are "little more than mail drops."

In 1993, the South Carolina Supreme Court ruled Geoffrey was subject to tax, and shortly thereafter Florida adopted a rule against such shell companies.

But state courts elsewhere have sided with the businesses and Florida's law is vague.

"It didn't 100 percent shut the door," said Scott Brandman, a tax defense lawyer who advises multinational corporations on ways to reduce state taxes. "Many companies put these structures in place before states put in regulations. Some believe they constitutionally have a right to do it. Some don't know the rules have changed."

Toys "R" Us, which had earnings of $361-million before taxes in the year ended Feb. 1, received a refund of income taxes from the states, according to a financial statement filed with the Securities and Exchange Commission.

It declined to discuss its Florida tax payments and didn't directly respond to questions about its Geoffrey shelter.

"With over 1,000 stores across the United States, Toys "R" Us makes meaningful tax payments to every state we do business in," the company said in a one-sentence statement.

The study by the Multistate Tax Commission concluded that state-to-state income shifting strategies cost Florida between $170-million and $365-million in 2001.

"Dead janitor insurance'

Corporate shelters designed to avoid federal taxes also cost Florida revenue.

For every dollar the IRS loses because of a shelter, the state loses about 18 cents, according to revenue officials.

For example, AutoNation Inc., Florida's largest public company, agreed in March to pay the IRS about $470-million, including interest, after auditors challenged a tax-savings strategy involving accelerated deductions for employee benefits.

AutoNation spokesman Marc Cannon said the company filed an amended Florida return last week.

The Fort Lauderdale-based retailer of new and used cars used the shelter in 1997 and 1999, according to a federal report. More than 100 large firms employed a similar shelter.

AutoNation has 6,500 employees at 64 Florida dealerships. It reported $618-million in pretax profits on $19.5-billion in national sales last year. While it declined to say how much it paid the state, AutoNation's 2002 financial filings suggest it contributed more in Florida income taxes than many multistate firms.

Take Florida's third largest public company, Winn-Dixie Stores Inc. From 1993 through 1997, the Jacksonville-based supermarket chain used a tax shelter later deemed a "sham" by U.S. courts.

It took out life insurance - payable to the company - on more than 36,000 employees. The premiums, like any employee benefit, were considered a tax-deductible business expense.

Until Congress cracked down in 1996, dozens of businesses adopted a similar tactic: They bought insurance policies and collected when low-level employees died. The cash payments were also tax free.

"At the time of our participation, this was believed to be an appropriate strategy to fund employee benefits," said Winn-Dixie spokeswoman Kathy Lussier. "We were the test case to set a precedent."

In accounting speak, the shelters are called COLI (or corporate-owned life insurance policies). Some insurance brokers privately call it "dead peasant" or "dead janitor" insurance.

Court documents say Winn-Dixie anticipated tax savings of more than $2-billion over 60 years. But in 2001, the 11th U.S. Circuit Court of Appeals in Atlanta upheld a tax court ruling that the policies were little more than a scheme to avoid taxes.

To settle the issue, Winn-Dixie said it paid $52-million in taxes and interest to the IRS this year.

With 100,000 employees nationwide and 450 stores in Florida, the company reported pretax profits of $304.4-million last year. It had a relatively low tax rate, paying $11.8-million to all the states.

Another firm that took out life insurance on its rank-and-file workers is Wal-Mart Stores Inc., the world's largest retailer. It employs 76,400 Floridians and operates 192 stores and four distribution centers in the state.

"We saw COLI as a possible way to reduce our corporate income taxes which, in turn, could help us defray the rising cost of providing health care benefits to our people," Wal-Mart spokesman Tom Williams said in an e-mail. "As it turned out, the program did not work out well for us."

First, families of some Wal-Mart employees sued, saying the company purchased the policies without their knowledge and cashed in after their loved ones died. They want some of the proceeds.

Then, in a lawsuit filed in Delaware, Wal-Mart attorneys said the retail giant had settled with the IRS in August 2002 for a "substantial unanticipated tax liability ... under threat of litigation."

"It's especially bad when your employer has an interest in your early demise," said Scott Clearman, an attorney for the workers.

The Bentonville, Ark.-based retailer said it dropped all of its 350,000 policies by January 2000. It is now suing two insurance companies that sold it the policies, saying they misrepresented the risks. Wal-Mart said it lost at least $135-million.

America's No. 1 store is also among the nation's largest taxpayers, paying $57-million in Florida property, unemployment and income tax last year. It declined to say how much of that was state corporate income tax.

But considering its $244.5-billion in sales and $12.7-billion in pretax income, Wal-Mart still pays a relatively small amount of income taxes to states.

Tax credits

Like many large corporations, Wal-Mart also takes advantage of state tax credits. Florida offers them to firms that create jobs in enterprise zones, which are rural or urban areas targeted for economic revitalization.

Businesses can also get credits if they do research, provide child care or contribute to charity. And while some states are cutting back on the use of credits, contending that the giveaways hurt other taxpayers, Florida keeps approving more.

With the help of Gov. Bush, Wal-Mart qualified for tax refunds of up to $2.88-million for building a grocery distribution center near the northeast Florida town of Macclenny.

In its application for the tax break, Wal-Mart played the Sunshine State against the Peach State: "In the event our application is denied, we would pursue to expand in Georgia. Our capital investment of $40-million and 600 jobs would be welcome in Camden County."

Florida won the bidding. "They (Florida) threw everything at Wal-Mart to make the project happen," a message in a state file says.

Wal-Mart said it already has received $540,000 for the Macclenny project and expects the rest over the next four years.

In 2001, Bush's office also agreed to a deal worth $539,000 after Wal-Mart opened a store in Florida City.

Although Florida is more than willing to sanction corporate handouts, state officials are less willing to discuss how they are used. Neither Florida nor Wal-Mart would say if it is getting the breaks on its corporate taxes, sales taxes or both.

Wal-Mart said it has created more than 1,200 jobs in exchange for all the credits, but it stressed that it doesn't rely on government subsidies. In the past three years, Wal-Mart said, it has added 15,000 people to its Florida payroll.

- Times computer-assisted reporting specialist Connie Humburg, researchers Kitty Bennett and Caryn Baird and editorial assistant Eden McDowell contributed to this report.

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