A new report from Good Jobs First released today concludes that Wal-Mart methodically attempts to lower its property taxes by challenging the assessments of its stores and distribution centers. Good Jobs First is a non-profit, nonpartisan research center in Washington, D.C. The group has documented in an earlier report how the giant retailer uses public subsidies to build its stores and site infrastructure. Today’s study, Rolling Back Property Tax Payments, charges that Wal-Mart “drains vitally needed funds from communities by regularly challenging the valuation put on its properties by public officials.” According to Philip Mattera, research director of Good Jobs First and principal author of the report, “When the company succeeds in one of these challenges, it diminishes the funds available to pay for education, police and fire protection, and other essential services provided by local governments.” Good Jobs First reviewed a national sample of Wal-Mart stores and all of its distribution centers open as of the beginning of 2005. Wal-Mart has filed assessment challenges at more than one-third of its facilities around the country. At many facilities there have been appeals in multiple years. Overall, Good Jobs First estimates that Wal-Mart filed more than 2,100 property tax challenges nationwide. “These systematic property tax challenges are part of a larger pattern of state and local tax avoidance by Wal-Mart,” Mattera noted. “They are consistent with the company’s reported use of a real estate investment trust gimmick to dodge income taxes in many states. And they are consistent with the widespread property tax abatements, income tax credits and sales tax diversions that make up a large part of the more than $1.2 billion in economic development subsidies that Good Jobs First has documented in previous research on Wal-Mart.” Property tax valuation disputes are challenges to the local assessors, and are pursued in direct opposition to the wishes of local governments. Cities and towns can oppose Wal-Mart claims, but it can be a financial burden to try to fight Wal-Mart legally. A property tax abatement request can be turned down by local asessors, but Wal-Mart just takes their case to a state appellate board, tying up local staff and resources. “We were surprised to find that Wal-Mart, despite its enormous resources, loses more assessment challenges than it wins,” said Greg LeRoy, of Good Jobs First. “Even when it wins a reduction, it often fails to get as much as it wanted, meaning that the overall dollar amount of Wal-Mart’s tax reductions is far below what the company sought.” The Good Jobs First report found that the company’s win rate in assessment challenges is just under 50%, and that it has won a total of about $30 million from those appeals over the past decade. “We were amazed at how outspoken some local assessors were when we phoned them for information about Wal-Mart,” Mattera said. A county official in Arkansas, the company’s home state, said in reference to a court decision that rejected the company’s attempt to reduce the value of a distribution center by more than 30%: “We just kicked their butt.” Good Jobs First found significant variation in the frequency of assessment challenges from state to state. The largest numbers, both in percentage and absolute terms, were found in Texas. More than 80% of the Texas stores in our random sample of Wal-Mart stores had at least one challenge. Other states found to have high appeal rates are Colorado, Kansas, California, New Hampshire and Georgia. The states with the most frequent appeals are not always those in which Wal-Mart has the most success. While Texas has the most appeals, the company’s success rate in the state has been only 43%, far below the 82% success rate in Florida, for example. In California, the state where Good Jobs First found the second largest number of appeals, its success rate has been even lower: 25%. There is no evident relationship between the frequency of Wal-Mart’s challenges and the property tax rates in different states. Those with the highest frequencies include Texas, which is considered to have high property taxes (it has no state income tax), and California, which because of Proposition 13 has low property taxes — as well as states not necessarily high or low. Although Wal-Mart’s overall campaign to downsize its property tax payments has been blunted in some states, the company has won big tax cuts in certain individual communities. In numerous locations, Wal-Mart has won total tax savings of more than $100,000. For example: in 2004, Wal-Mart proposed that the assessment of its distribution center in Tomah, Wisconsin be lowered from $43.6 million to $23 million. The city resisted, but Wal-Mart persisted. This year the matter was finally settled, with the city agreeing to drop the assessment to $31.4 million and refund the company more than $300,000 for each of three years — a total of $949,000. Wal-Mart’s corporate goal appears to be “low, everyday taxes — always.”
Sprawl-Busters has been reporting on Wal-Mart’s “property tax shake-down” for years. On March 17, 2002, for example, we presented the story of the little community of Saukville, Wisconsin, where Wal-Mart was trying to get a break on their local property taxes. According to the editor of the Ozaukee Press, Wal-Mart had applied to the town for a tax abatement to lower its assessment by $1 million. This would result in a tax break for Wal-Mart of $21,306. The tax cut would also take $11,469 from the Port Washington-Saukville School District. An amount, said the newspaper, “that far exceeds the value of the store’s well-publicized Teacher of the Year award.” The editor of the County newspaper wrote a column criticizing Wal-Mart’s move. “Never mind the fact that the value of almost every property — commercial, industrial and residential — went up this year as a result of a villagewide reassessment; the corporation doesn’t want to pay what the village says is its fair share of taxes.” The editor notes: “No matter how hard the store tries to give the impression that it is a concerned member of the business community, the truth is it is part of a chain whose interest in Saukville is, at best, fleeting, and over which the village has little influence.” And on July 30, 2007, in Iowa City, Iowa, Wal-Mart appealed the city’s valuation of its building. The property was originally assessed by Iowa City at $5,711,420, but the company appealed that assessment to the city’s property tax board of review. The city accommodated Wal-Mart, and dropped the assessment to $5,530,070. Wal-Mart appealed again, showing the same kind of pressure it puts on vendors to keep lowering their price. This second appeal was filed with the new Iowa Property Assessment Appeal Board. The company wanted its store value rolled back to $3,900,000 — a 32% drop. The tax rate in Iowa City at the time was $38.83 per $1,000 in valuation, so Wal-Mart wanted officials to lower its valuation to $3.9 million, causing the city, county and school district to lose roughly $63,296 — enough to pay for a full-time police officer to patrol Wal-Mart’s parking lot. The Good Jobs First study demonstrates once again that taxes are just another business expense for Wal-Mart to try to force down anyway possible. In this case, the losers are the very same officials that opened their arms to the retailer. To read the full report on Wal-Mart’s deadbeat tax strategy, go to www.goodjobsfirst.org. The group’s earlier report on corporate welfare for Wal-Mart can be found at www.walmartsubsidywatch.org.