Lawmakers push to close property tax ‘loophole’ for big box stores

LANSING, Mich. (WILX) -While big chain stores thrive, communities in Michigan say they’re suffering.

That’s why state lawmakers are pushing to change a property tax law that keeps costs low for corporations.

The aisles might be full of everything a person needs, from groceries and toiletries to household supplies and medications, but state and local leaders say there’s something that big box stores are not providing for the community, and that’s valuable property tax dollars.

“We believe that the lost revenue is likely an excess of $2 billion and growing every year,” said State Rep. Julie Brixie (D-Okemos).

Those losses can be traced back to something called the “Dark Store Loophole,” when a corporation files an appeal with the state’s Tax Tribunal, asking for their property tax value to be lowered to match the value of nearby empty stores.

Meridian Township Assessor Ashley Winstead said a tax appeal led to cuts in several departments during a renovation of their local Meijer store.

“The $2 million reduction to the value resulted in thousands of township tax dollars lost as well as our DDA funding being wiped out,” she said.

The Michigan Chamber of Commerce argues the system is no loophole, saying businesses should pay property tax on what their property is worth, not their businesses.

“It isn’t fair to say, we are going to compare this store at its prime when it’s doing its best when there is likely going to be someone else in that store for a different use,” said Director of Legislative Affairs Leah Robinson.

Robinson said businesses are not out to negatively impact the communities they’re welcomed into, but that their tax appeals to the state are made to keep their property tax rate fair.

However, lawmakers like Brixie said the financial impact on communities is too severe.

She said municipalities do not typically have the funds to pursue a court case with a big box store; rather, they’re forced to settle the amount of property tax the business is owed back.

Brixie and other lawmakers in the Michigan House of Representatives have introduced a package of bills to change the tax law and keep future chain stores from being able to take full advantage of the appeal.

“In every community where big box stores exist, we can point to a school or a district library that has been made to pick up the bill when a big box store shirks their responsibility,” she said.

The series of bills were introduced in the House, but Brixie is not expecting a hearing on the proposal until legislative committees are back in session in December.

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