Lots of local officials around the state, including Franklin mayor Steve Olson and Milwaukee mayor Tom Barrett are mighty upset that legislative leaders in Madison have said legislation to address the so-called “dark store” tax loophole is dead for the current legislative session.
One of the sponsors of two bills to do away with the so-called loophole is state Senator Janis Ringhand (D-Evansville) who writes:
“Simply put, failure to address the Dark Store tax scheme will lead to property tax increases for homeowners throughout Wisconsin. Big Box retailers have developed the “Dark Store Theory” to lower the value of their commercial property and shift their property tax burden onto local homeowners. Using the Dark Store theory, corporate tax lawyers argue that new, fully operational Big Box stores be assessed at the same value as the empty, abandoned store they have left behind.”
That’s the mantra of supporters of legislation that is essentially favoring tax increases.
State Senator Bob Wirch (D-Somers) wants the governor to call a special session.
Assembly Speaker Robin Vos (R-Rochester) offered some common sense when he spoke to the Racine Journal Times.
Vos said he’s skeptical of the legislation.
“I don’t believe we should be raising taxes on anybody,” Vos said. “Whether they own a business, a dark store, a shopping mall, a home … unfortunately, I think what they’re hoping to do is try to have business pay higher taxes and I’m just concerned about that.”
Vos, however, said that there are some abuses that need to be fixed.
“I certainly believe we need to have assessors do a better job … but I’m not sure that this bill is the right answer for that problem,” Vos said.
As far as the loophole shifting the tax burden to property owners, Vos said that is not true.
“Businesses today pay a higher percentage of the overall property tax burden than they did 10 years ago,” Vos said. “If that’s true, we would have seen the opposite and we’re not. I think that’s an example of rhetoric getting ahead of the reality.”
Vos said he would like to see the issue evaluated in greater depth to find a more appropriate solution.
“I would prefer to take the summer to do a study to try to determine the best way to solve this problem,” Vos said. “It’s going to take time and study to find the proper answer, and I think this is people looking for a political solution to say they did something rather than looking for the right answer.”
Here’s a thought. If local leaders don’t want homeowners to pay high or higher taxes, how about reducing spending?
Finally, two experts that deal with property tax appeals have written about this issue on a Bloomberg news site:
The “Dark Store Theory” was initially developed by a handful of activist assessors and appraisers in an attempt to tax big box retail stores based on above-market built-to-suit leases as opposed to their fee simple fair market values in order to increase local tax bases. These activist assessors and appraisers have creatively spun the theory as a “tax loophole” used by large corporations seeking to avoid paying their “fair share” of local property taxes. Proponents of the theory argue that big box retailers want their operating stores valued as if they were empty and abandoned – i.e. like a “dark” store.
Our opinion? The theory is nothing more than a populist propaganda tool being used to blame those perceived as outsiders for shortfalls in local governmental budgets.