Monday, March 14, 2016

How corporates get their property taxes lowered, and yours to go up

I wanted to talk about an intriguing piece in Sunday’s Janesville Gazette (with thanks to the always-great Wheeler Report to draw my attention to the article). This article discusses an argument that Wisconsin businesses and corporations have been trying to pull over on cities and other local governments, in an attempt to lower their property assessment. Such a move illustrates the type of everyday scams run by the rich and well-connected that cost average Wisconsinites major dollars in property taxes every year, and why these “job creators” spend so much of their profits to lobby for favorable and elect puppets at both the judicial and legislative levels.

The story is from Elliot Hughes and is entitled “'Dark stores’ argument allows big businesses to skimp on property taxes.” Here’s how the argument goes, and how it pays off for the businesses.
When these arguments are made, the commercial property owners basically say their properties, when being assessed for its value, should be compared to a property with a similar but vacant building--a dark store.

Businesses argue that their buildings are so specific and unique to their needs that if the business ever left, the property would never sell because nobody could use the leftover structure. It's also common for deed restrictions to prohibit the sale of buildings to competitors anyway, according to experts.

So, they conclude, their property value should be lowered.
In other words, these businesses shouldn’t have their property values judged based on what the property is worth today, but instead have it based on what would happen if they weren’t operating there. And many municipalities such as Janesville don’t have the resources and/or attorney staffing to make it cost-effective to challenge the business’s argument in court, so often they end up settling with the business, lowering their assessment, and having to figure out a way to make up the difference on the rest of their property taxpayers (most of which are everyday residential homeowners).
[Amie] Trupke (who is hired by the City of Janesville on retainer for these types of cases) and Assistant City Attorney Tim Wellnitz identified eight businesses that have used the dark store tactic against the city: Blain Supply, Farm & Fleet, Target, U.S. Bank, Menards, Sears, Rosebud Partners (for Wildwood Theaters) and Jade Taco (for Taco John's)….

Sears got about $1.5 million of value knocked off its property at 2500 Milton Ave., while Target, Jade Taco and U.S. Bank each shed less than $1 million of value off their properties at 2017 Humes Road, 2821 Milton Ave. and 2732 Milton Ave., respectively.
Hughes saysin the article that those rulings resulted in more than $132,000 being paid back by the City of Janesville to these businesses, not an insignificant amount when you consider the City of Janesville's entire property tax levy was $28.4 million in 2015.

Favorable property valuations are among the largest reasons right-wing and corporate organizations want to put a hack like Rebecca Bradley on the court. Because a relatively common topic that the Wisconsin Supreme Court rules on is interpretative items such as how to assess certain types of property. Getting a pro-corporate “justice” like Bradley onto the bench makes it more likely that these corporations will get rulings in their favor, which lowers their property taxes, while raising the taxes for everyday homeowners, because it leads to higher tax rates to make up for the lower corporate property values.

If the property valuations are disputed, these cases often end up in court, and sometimes reach the highest levels. A good example of this was back in 2011, when Adams Outdoor Advertising got over $917,000 back from the City of Madison after the Wisconsin Supreme Court ruled that the city had to base its assessment on the value of the property and the permit, and not solely the income that the billboard generated for the company. Here’s a 2009 case involving a similar billboard assessment issue in Milwaukee, and more often than not, the corporations have been favored in these types of cases in the last decade in Wisconsin.

The Supreme Court also rules on other assessment questions as the “arbiter of last resort,” and the 5-member right-wing majority recently agreed to take a case that could reduce the property assessment of a Racine low-income housing apartment complex by at least $1.4 million in two different years. And if the Supreme Court rules in favor of the apartment complex owners, then it sets precedent for similar lawsuits and lowered assessments for similar developments around the state.

This is yet another example of how things are rigged against the average middle-class worker in Wisconsin. Corporations and other businesses get targeted tax breaks from the GOPs in the Capitol, and use that extra money not to raise wages or hire more workers, but instead hire attorneys to lobby and argue for more favorable regulations (or no regulations), and for lower property assessments. They may also give campaign contributions to politicians to pass favorable laws and to judges who rule in their favor. These lower costs and assessments then allow even more money to flow toward the attorneys, politicians, and judges, while the vast majority of us outside of this inner circle see our wages stagnate, and our property taxes go up.

And scams like this will continue until everyday citizens get a clue and say “NO MORE!”


  1. Another tax shift will occur if the personal property tax is repealed. This would reduce business taxes but would not change the levy freeze amounts imposed on local governments. The likely result would be higher property tax on homeowners.

    1. Very true, and SOP for this crew- helping their contributors at the expense of everyone else.

      And is this the same Mark Harris that Scott Fitzgerald is so afraid of he changed state law? I believe it is, and it's that kind of in-depth understanding of how these fiscal issues work, and how they connect to other policies, which is why

      I'm a big fan of yours, sir, and I'm honored to have the readership.