Big Box Stores’ Other Shoe Drops
Lowe’s is a parasite that is killing its host
Since the start of this century, small- and mid-sized towns have courted big box stores, using tax revenues to fund expensive road, sewer, and electric expansions to lure large corporate chains to town.
These companies promised jobs and tax revenues, and, technically speaking, they delivered both, but only if you do some very funny math. National chains pay little or no federal income tax, and often secure state tax abatements.
This gives them a 30–40% advantage over small, homegrown businesses operated by locals who can’t afford the huge sums needed to pay corrupt tax-experts to establish fictional headquarters on offshore financial secrecy havens.
Large national chains also have commanding bargaining power when they negotiate with suppliers, which means they pay less for their merchandise than locally owned businesses.
Given the tax and purchasing advantages, the arrival of a big box store doesn’t really create jobs. Sure, they hire locals to work in their stores, but at the cost of a boarded-up main street where the only businesses that survive are dollar stores.
When a local government spends public funds to lure in a big box store, they actually cost the town net jobs, and the funds they spend to kill those jobs come from the workers whose jobs were lost and the businesses that provided those jobs.
But at least big boxes pay local taxes, right?
In Michigan, Lowe’s pioneered an aggressive tactic of lowering its tax bills. It’s called the “dark store” gambit, and it’s so successful that towns are refunding millions to big box stores.
In her breakdown for ILSR, Olivia LaVecchia explains how the “dark store” hustle works. First, a big box store files an appeal on its tax assessment, arguing that the town or county has overvalued its property.
Instead of opting for the usual assessment formula (building costs minus depreciation), they demand assessment based on the sale price of “comparable” properties.