‘Dark Store Theory’ used by retailers to shift burden, resolution says
The Saukville Village Board has adopted a resolution urging the state to close the tax loophole being used by some major retailers to avoid paying their share of property taxes.
The resolution reflects the position recommended by the Wisconsin League of Municipalities, a lobbying organization for municipal governments in the state.
It takes issue with “tax avoidance strategies that national chains like Walgreens and big-box retail establishments like Target and Lowe’s are using across the country to gain dramatic reduction in their property tax bills at the expense of other taxpayers.”
Those retailers have been advocating an approach that has been termed “Dark Store Theory,” contending the value of their properties for tax purposes should be based on comparing their valuations to vacant stores in abandoned locations.
The resolution notes that “a carefully orchestrated wave of hundreds of lawsuits in Wisconsin is forcing assessors to slash the market value of thriving national retail stores, shifting their tax burden to local mom and pop shops and homeowners.”
Walgreens and CVS were singled out as strong proponents of the tax-shifting strategy, forcing several communities to refund taxes already collected.
The owners of the Saukville Walgreens have not requested any adjustments to their tax bill.
The resolution notes that the Republican-controlled Legislature in Indiana has twice passed legislation over the past two years prohibiting assessors from valuing new big-box stores as being comparable to nearby abandoned stores.
Similar legislative action was taken last year in Michigan.
The village’s resolution seeks to have that same strategy used here, urging “the governor and the Legislature to protect homeowners and main street businesses from having even more of the property tax burden shifted to them by passing legislation clarifying that … leases are appropriately factored into the valuation of leased properties.”
It also asserts that assessors be allowed to use “highest and best use” when setting the valuation of a property, rather than being limited to comparing the value of a viable business to similarly sized but vacant properties.
Village President Barb Dickmann said the tax inequity was a hot topic during a recent financial management seminar hosted by Ehlers, the village’s financial adviser.
The resolution was unanimously supported last week by trustees.