Proposed Dark Store Legislation Puts a Thumb on the Scale of Fairness

By Christopher L. Strohbehn

Max Baucus once said that “Tax complexity itself is a kind of a tax.” That statement is true in many ways.

Recently, a number of bills, Assembly Bill 386 and Assembly Bill 387, have been submitted in the Wisconsin Legislature at the behest of varying municipalities seeking to change the ways that properties are valued in this state for a specific class of property owners. These changes seek to make the use of tax valuation rules for certain properties much more complex by seeking to step outside of the valuation of the real property to include other financial data. In essence, they are seeking to complicate the state tax laws to require that certain property owners have to be separated and segmented into their own specific market rather than the general market as a whole. This runs afoul of not only common sense but also the uniformity clause of the Wisconsin Constitution.

Why are the municipalities seeking to do this? Because they want more tax money from those property owners than what courts in this state will allow under the current law.

Property owners are litigating cases across the state regarding this issue of what the property is worth on the free market. Municipalities from all areas of Wisconsin, generally, do not like the answer they have been receiving when their day in court comes. Courts are determining that municipalities and their assessors are often times overestimating the value of these properties. The downside is that when municipalities are overestimating these values, claims for tax refunds can be made. That is how it should be. The solution is to get it right under the rules and law. Instead now, rather than trying to get the values right under the current law, municipalities would rather change long-standing rules and concepts as well as the current law set forth in Walgreen Company v. City of Madison, 2008 WI 80, 752 N.W.3d 689 (2008) to arrive at the conclusion they want.

These actions and proposed changes are simply not fair to the taxpayer and property owner. Everyone should be held accountable by the same set of rules, laws, and principles. Taxation and treatment of property owners, regardless of class or type, should be even and uniform. That is what makes the free market work. Introducing artificial markets or “segments” into being to enhance revenue for municipalities might increase their revenue, but is it reasonable or fair for the legislature to change the rules for one set of taxpayers to the benefit of the others?

Segmenting property owners into specific and discriminatory classes hurts the ability to value business class properties across the state by injecting unrelated and irrelevant financial data and is a fundamentally unfair way to treat a certain class of taxpayers. If governments or municipalities want more property tax revenue that is fine, but the fair and reasonable way to increase revenue is to raise taxes on all classes of property equally. Putting the proverbial “thumb on the scale” will not accomplish that and will likely make the issue of property valuation much more complex.