Big box stores tax reform plan faces uphill battle

Lansing — A plan to stop big box stores like Target and Costco from paying less in local property taxes is underway again in Michigan after it passed the state House last year but died in the Senate.

Republican state representatives reintroduced a bill Tuesday to change the property tax appeal process, a measure that passed the House by a wide margin last year despite opposition from groups that lobby for big businesses, such as the Michigan Chamber of Commerce and the Michigan Retailers Association.

Supporters say it’s supposed to make sure big retail stores pay what other businesses do in property taxes. They argue big box stores currently are underpaying by millions of dollars based on the way they assess their property value.

Developers in Kalamazoo paid $5.5 million for a patch of land and a total of $17.5 million by the time a new Costco was built, said Rep. David Maturen, R-Vicksburg, who sponsors the bill to change the way property tax is assessed. Maturen said the company said the property was worth $4 million and asked the Michigan Tax Tribunal to be taxed as if it were worth $2 million.

Maturen and other lawmakers say big box stories similarly try to undervalue their properties across the state. But examples in the Upper Peninsula have gained more notoriety as the state’s Supreme Court prepares for a case between Escanaba and Menards, a home improvement chain, with oral arguments expected in the coming weeks.

Supporters say the legislation is needed regardless of how the Supreme Court decides the case.

But continued opposition from the chamber and retailers association could prove an obstacle in the Senate. Opponents said last year the legislation attempted to discourage companies from appealing property assessments and could hamper businesses.

“The Senate, at this point, doesn’t have their ears open on this issue,” said Rep. John Kivela, D-Marquette, who supports Maturen’s bill. But he said asking “businesses to pay their fair share” isn’t an “attack on business.”

mgerstein@detroitnews.com