Part 1: Minnesota’s Unequal Protection Under the Law

| Jan 22, 2021 | Commercial Property Tax Appeals

Americans love underdogs. When the little guy triumphs – whether it’s in sports, politics or in legal disputes – it’s often a sweeter victory for us.

Few people think of Walmart as an underdog. The retailer is the world’s largest private employer and it generates more revenue than any other company anywhere.

However, like every other American business, Walmart must obey the laws of the land. The retailer, though huge, does not get to set its own rules. Even Walmart must expect that the rule of law – a legal principle that all people, institutions and companies are accountable to laws equally enforced – will apply to it just as it does to the smallest Mom and Pop store.

Unequal enforcement

Unfortunately for Walmart, in Minnesota the rule of law in being unequally enforced by state courts. With commercial property tax valuations, the big-box retailer is being held to a different standard than its competitors – a higher, much more expensive, punishing standard.

In a rare role reversal, the world’s largest company is the underdog as it challenges state law that unfairly singles out the Bentonville, Ark.-based company, and imposes higher property taxes on it than on other retailers.

A constitutional challenge

Walmart is challenging Minnesota tax law on constitutional grounds, arguing that its right of equal protection under the U.S. Constitution’s 14th Amendment is being violated.

Walmart attorneys have argued in Minnesota district courts that assessors in four counties – Anoka, Martin, Winona, and Washington – “intentionally,” “willfully” and “systematically” discriminated against the retailer by overvaluing its properties when compared to similar properties in the same tax district.

Ground Zero of the tax fight

The Martin County city of Fairmont sits about 130 miles southwest of Minneapolis. Its 10,000-plus residents can shop at both a Walmart, on the north side of Interstate 90, and a Kmart, sitting on the south side of I-90. But the two retailers are miles apart in their assessed values.

Kmart is assessed at $3.80 per square foot, while Walmart is assessed at $81 per square foot. Walmart’s property tax assessment is at a rate 21 times greater than Kmart’s.

Few people would see that stark difference and say that Minnesota tax law is being applied equally.

Walmart is not the only retail chain to fight unfair property tax assessments and Minnesota isn’t the only state where the valuations are being contested. Target, Menards, Lowe’s, Home Depot and others have challenged assessments in Minnesota and elsewhere.

Their legal challenges have been based on “dark store” comparisons – a topic we’ll explore in a coming post. Please check back.