End tax shift, close Dark Store loophole

Over the past few weeks, among the Christmas cards and holiday packages, homeowners in Wisconsin received their annual property tax bills.

Complaining about how high property tax bills are is as much a pastime for state residents as rooting for the Packers or playing Sheepshead at deer camp. Property taxes are vital to paying for municipal services from keeping the roads plowed and paying for law enforcement to ensuring quality educational opportunities for Property taxes are also among the more level types of taxation with a flat rate set and the amount people pay based on the value of their land and improvements. When it comes to residential properties, the system is straightforward. The person with a million dollar mansion will pay significantly more than the person with a modest home on a small city lot.

Things get weird, however, when it comes to including commercial and industrial property in the mix and ensuring these business entities pay their fair share for community services.

This has gotten more challenging in recent years as big-box retailers have increasingly used the state’s “Dark Store” loopholes in the tax code and threats of expensive litigation to strong-arm municipalities into lowering property tax assessments on these billion-dollar companies and in the process shifting more of the tax burden onto homeowners. Thanks to the Dark Store loopholes, Big Box retailers use more and pay less for essential municipal services like police, fire and other emergency services than the average homeowner or small business.

According to the League of Wisconsin Municipalities (LWM), in 1970 Wisconsin homeowners paid about 50% of all property taxes in the state. Currently, that percentage has skewed to where homeowners are paying almost 70% of all property taxes. According to the LWM, the Dark Store loopholes will likely mean a property tax increase of 8% or hundreds of dollars more each year for the average Wisconsin homeowner in the coming years.

Under the Dark Store loophole, megaretailers claim that an empty store in the nearby area shows their property assessment should be lowered regardless of how profitable they are or the reason the other store is empty. In the city of Medford, Walmart attorneys used this and were able to pressure the city into an agreement to lower the assessment resulting in city residents having to absorb more than $30,000 in additional local taxes. The same scenario has played out in communities large and small across the state protecting corporate profits at the expense of Wisconsin families.

Wisconsin must join other states such as Indiana, in closing these loopholes and ensuring that mega-retailers pay their fair share in keeping local communities running. Every effort to close the loophole has been met with stiff opposition from the Wisconsin Manufacturers and Commerce (WMC). The WMC is backed by these corporate interests and in addition to having a stranglehold on legislative leaders is doing their work in the courts taking action against municipalities that are challenging these tactics. Protecting homeowners and small businesses from this unfair tax shift is both bipartisan and broadly supported among individual legislators, but leadership lacks the will to bring a clean bill to a vote.

Wisconsin homeowners must make their voices heard. They must contact their legislators and demand action on closing the loopholes and fixing the system that allows billion dollar companies to stick it to state residents.