In a scheme that could lead to millions of dollars in lost revenue for Maine communities, behemoth retailers like Walmart, Lowe’s and Home Depot are looking to bypass state property taxes by arguing that towns should calculate the value of their stores as if they were “dark,” or closed.
According to a report from the Maine Center for Economic Policy (MECEP) published Thursday, this argument, referred to as the “dark store theory,” has been successfully used in other states. When paired with the threat of legal action that could bankrupt a small community, these multinational companies often end up succeeding in paying far less in property taxes.
MECEP policy analyst and report author Sarah Austin likened it to “arguing that a single-family home should be assessed as if the neighborhood had fallen on hard times and everyone had moved out, even if the home today is in the most popular part of town.”
“These corporations are essentially asking communities to ignore the current value of their property and instead consider what it would be worth if they relocate or close,” Austin added, “a decision they’d make only when market conditions in their location are no longer favorable.”
In Maine, this fight is currently playing out in Thomaston, where the local Walmart has sought to cut its property valuation by nearly half, from $392,000 to $168,780. The Thomaston Board of Assessors voted to reject that request and Walmart is now appealing to the state.
In Michigan, “dark-store appeals cost local budgets $100 million between 2013 and 2017,” MECEP noted. In Wisconsin, a study from the League of Wisconsin Municipalities estimated that homeowners and non-retail businesses throughout the state could see a property tax increase of four to 17 percent as a result of this tax avoidance scheme.
Overall, the “dark store” argument has had slightly less success in Maine, though MECEP argues that lawmakers should do more to protect communities. For example, over the past four years, Bangor has fielded appeals from Lowe’s, Best Buy, and Walmart for reductions totaling $33 million. Though the chains only secured a total of $6.8 million in reductions, property tax revenue for the city still took a hit.
“So far, big-box stores have had mixed success using dark store theory to seek tax cuts in Maine,” Austin concluded. “But MECEP’s survey and interviews with local assessors suggest Maine communities will face a steady and growing stream of appeals in the coming years. Action at the state level could protect municipal property tax bases, local budgets, and basic fairness for other residential and business property taxpayers.”
Published in The Beacon, Nov. 2, 2019