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This Just In: National Chains Are Not Good Neighbors. They Want Lower Taxes More than Quality Schools

August 5, 2017

Earlier this week Education Week writer Francisco Vera-Orta wrote on the “dark store theory “, the latest ploy big box stores are using to avoid paying their fair share of property taxes. The gambit works like this: attorneys representing the big box stores sue the local governments claiming that their huge stores should not be assessed based on square footage calculations because their stores are specially designed for their enterprise only and could not be resold on a per-square-foot basis. As Mr. Vera-Orta reports:

When they succeed, the annual property taxes that retailers pay—which help fund public schools in most local communities—can drop precipitously. 

When they succeed—and the retailers ARE succeeding with this theory at the local level and in the courts— either school budgets need to shrink to address the revenue shortfall or taxes need to increase. As Mr. Vera-Orta reports:

When big-box retailers prevail in lowering their assessments, it can shift more of the tax burden to homeowners and to smaller, local businesses which may not have the legal firepower to push back on how their stores are appraised. Of course, schools depend on revenue generated from homeowners and local business owners as well, so the entire school finance ecosystem could see some form of impact…

The only good news from this trend is that Republican legislators are concerned about it. Republican representatives in TX, MI, IN and WI have introduced bills to forbid the use of this theory, but have so far been unable to gain enough votes to secure permanent passage.

The other good news: local governments who eagerly invite these stores to invade their communities might think twice about the economic benefits they expect to gain… and MAYBE see the benefits of supporting their local businesses instead of inviting a national chain into their communities.

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