It’s Time to Boycott Walgreens

[Lutherf]

Interesting 'analysis' there. What's being argued is Walgreens is corrupt and is using its considerable power and political influence to evade taxes, thereby increasing taxes on the local residents and other businesses.

What's being argued is that Capitalism is evil and must be done away with, along with any and all who support the concept.

 

[<alt>doxygen]

What's being argued is that Capitalism is evil and must be done away with, along with any and all who support the concept.

No.

Care to provide a quote to support your claim? Maybe you have a very different idea/definition for capitalism?

 

[Lord of Planar]

When consumer friendly companies turn against democratic values the friendship sours.


https://www.nytimes.com/2018/12/09/...l?action=click&module=Opinion&pgtype=Homepage

I don't like Walgreens and don't shop there, but this is stupid.

You're going to affect employees that work there rather than the corporate money. Are you really that evil? Just because they don't support scoundrels like Hillary?

 

[Skeptic Bob]

Did you read the article you linked to? That's the exact method the author used to denigrate not just Walgreens but pretty much all corporations.


There is only one way to interpret this -

and that is, "Bob's a generally good guy but we need to kill him because he doesn't agree with our politics".

That’s not good.

 

[JasperL]

It's not all that crazy.

Especially when it comes to construction, the erection of a specific, specialized structure can actually decrease the resale value of the property. That becomes more of an issue the more a "brand" is associated with a given structure. For example, once you build a McDonald's that building will forever be identified as a McDonald's. The free standing CVS stores have the same issue. The structure is part of the brand and it's essentially worthless on the resale market.

OK, but then what is the FMV of a structure, if not the cost to buy the land and put a building up on it? In that case, CVS also sold the building for $4.5 million. So you're arguing, effectively, that CVS spent $4 million out of pocket to build something worth only $1.8 million, and that even on the court's terms someone loaned $4.5 million to CVS in a sale-leaseback on property worth half that amount. None of that makes any sense to me.

The argument essentially is the FMV for property tax purposes is the value not of the highest and best use, or current use, but of a theoretically lowest possible use of that real estate and structure.

 

[JasperL]

What's being argued is that Capitalism is evil and must be done away with, along with any and all who support the concept.

LOL, so you're doubling down on dumb straw men. At best/worst the argument is against corrupt crony capitalism, which is different than "capitalism."

 

[Lutherf]

OK, but then what is the FMV of a structure, if not the cost to buy the land and put a building up on it? In that case, CVS also sold the building for $4.5 million. So you're arguing, effectively, that CVS spent $4 million out of pocket to build something worth only $1.8 million, and that even on the court's terms someone loaned $4.5 million to CVS in a sale-leaseback on property worth half that amount. None of that makes any sense to me.

The argument essentially is the FMV for property tax purposes is the value not of the highest and best use, or current use, but of a theoretically lowest possible use of that real estate and structure.

The value to CVS (or Walgreen's or McDonald's or Howard Johnson, etc) is in the ready identification of the storefront by customers. It's as much a function of advertising their presence as it is anything else.

 

[Lutherf]

LOL, so you're doubling down on dumb straw men. At best/worst the argument is against corrupt crony capitalism, which is different than "capitalism."

One thing I can always count on from the left is that they NEVER truly hate anything or anyone.

They don't hate guns and they love the 2nd Amendment. That being said, they just want controls on those things enough that the common, law abiding person can't actually avail themselves of the use of either.

They love capitalism and free markets. That being said, they just want it controlled in such a way that the outcomes of commerce are totally predictable and evenly spread across the population.

They love border security and fully support the concept of a safe, secure, independent nation. That being said, they just want control over such things to be handled in such a way that international ideals are respected and honored to whatever extent foreign nations and people should determine is reasonable.

They love free speech and regard the 1st Amendment as one of the most important rights we have. That being said, they just want to insure that religious speech, hate speech and generally divisive political speech be restricted so that the people don't need to hear that kind of thing.

 

[ttwtt78640]

Why, yes, that's correct, but there is no need for a "comparable" value when you have the ACTUAL value which is a sale price on the open market between a willing buyer and seller. If you buy your house for $500,000, that is the FMV, because that's the price between willing buyer and seller. It doesn't matter what the house next to you sold for 5 years ago, because FMV is established by sales between willing buyers and sellers. Surely you know this. You cannot (unless you've got great lawyers, apparently) protest your property tax bill by arguing the property you paid $500k for is only worth $250k. But that's what CVS and Walgreens are doing, precisely.

My example was real, here's the case:

https://law.justia.com/cases/wisconsin/court-of-appeals/2016/2015ap000876.html

The court literally held that FMV as determined by actual purchases of land and construction prices and rent weren't FMV, and that a sale of the building didn't reflect FMV. It concludes with almost no discussion except hand waving that the value between buyer and sellers is inflated, as are rents, and it disregarded cost of construction. It's like reading something from another reality. CVS bought a building and land for about $2 million, tore down the existing structure, then spent another $2 million to construct the store, then sold that building and land for about $4.5 million once the store was completed.

That's FMV - either the cost of the building (their total cost in the structure and land was roughly $4 million) or the selling price ($4.5 million) is literally how FMV is determined - comps are only used when those direct approaches aren't feasible. CVS argued the value of something CVS paid $4 million to build was....< $2 million, and the value of something they sold for $4.5 million was < $2 million. It's surreal that the court AGREED.

Property is rarely assessed (for taxation purposes) at its fair market value (FMV). The game is played by assessing property at a fraction of its FMV and then setting property tax rates which requires legislative action to generate the desired amount.

This allows for instantly making ever more property tax revenue by simply re-assessing some (cherry picked?) property's values (upwards) to get whatever larger amount you later want without need of any legislative action to change the taxation rate.

So long as the assessed (fictitious?) value is lower than the FMV then the re-assessment value cannot (easily) be successfully legally challenged. Several locations have had laws enacted which limit the percentage of increase and/or the frequency of such re-assessing when no alterations have been made to the property. Simply because the house (or store) next door (or nearby) sold for a higher FMV does not mean that all 'comparable' properties then assume that as their assessed value.

 

[Neomalthusian]

The companies challenge the property tax assessments in court. So, yes, technically it's the courts adopting the arguments of the stores. It's a neat trick, though - buy a piece of property for $4 million, argue in court the correct property tax assessment is $2 million, and the court says, "You're right!"

It's not exactly a new tactic to try to decrease a tax assessment. For example the governor-elect of Illinois once uninstalled toilets from a mansion he wasn't living in so that he could argue the place was "unlivable" and cut his tax bill on it drastically. Pretty comical little stunt, but it happens all the time. Assessment methodology needs to be very well standardized and fairly applied across different tax jurisdictions. I'm not an expert on it and I haven't read up on Walgreens v. Madison, WI, but those issues need to be sorted out and fairly applied.

It may be that Walgreens pays tax on an assessed value that is significantly less than fair market value, but that's often the case with ordinary residential properties too, and in general (edit: as ttwtt notes directly above). Sometimes the assessment methodology doesn't necessarily directly follow the sales price.

On another note, I found it kind of funny that the article referenced a $1,000 and $6,000 political donation that Walgreens made. Only because, in the grand scheme of things, that is a pretty small donation.

 

[JasperL]

The value to CVS (or Walgreen's or McDonald's or Howard Johnson, etc) is in the ready identification of the storefront by customers. It's as much a function of advertising their presence as it is anything else.

It's also in the $2 million they paid for the land. They tore down the building so in an arms length transaction, CVS valued the underlying property at $2 million. CVS then argued, and the court accepted, that the land wasn't worth the $2 million paid in an arms length transaction - literally the definition of FMV - but $500k or so, or one FOURTH what they paid. How does that make sense? That is simply a fair estimate of the FMV of that property, because that's what it sold for in an arms length transaction between willing buyer and seller.

Etc. You're just asserting your conclusion and basically ignoring that FMV is defined by the price of something between willing buyer and seller and at multiple points CVS valued the property to them at FAR more than the $2 million claimed only for property tax purposes...

 

[JasperL]

Property is rarely assessed (for taxation purposes) at its fair market value (FMV). The game is played by assessing property at a fraction of its FMV and then setting property tax rates which requires legislative action to generate the desired amount.

But that's not what's at issue here. CVS literally argued and the court accepted that they paid $2 million for a piece of property - the underlying land - and it was only worth $500k. Assessment value is based on FMV, and it's the latter they're arguing is worth a fraction of what they PAID, and what they SOLD the property for in a sale/leaseback arrangement.

This allows for instantly making ever more property tax revenue by simply re-assessing some (cherry picked?) property's values (upwards) to get whatever larger amount you later want without need of any legislative action to change the taxation rate.

So long as the assessed (fictitious?) value is lower than the FMV then the re-assessment value cannot (easily) be successfully legally challenged. Several locations have had laws enacted which limit the percentage of increase and/or the frequency of such re-assessing when no alterations have been made to the property. Simply because the house (or store) next door (or nearby) sold for a higher FMV does not mean that all 'comparable' properties then assume that as their assessed value.

Again, those are all different issues. If you buy a house for $1 million, good luck when in the next month you argue for a property tax abatement because, no, that's not the FMV, it's actually worth $400k.... FMV is the price paid between willing buyer and seller. That is the definition of FMV.

The court ruled, effectively, that we'll ignore objective valuations of this piece of property and use subjective comps, of different property, and assume that CVS stores be valued at their lowest use, or some theoretical use not as a drug store, not their current use. It's bizarre.

 

[D_NATURED]

All the mega corporations are scumbags, they are about one thing only, getting the most profit at any cost. The disgusting fact that 3 people (Gates, Bezos, Buffet) own more than the bottom 50% in this country combined is prime example.

It's no secret republicans don't work for the people, they work for corporations. Democrats not that much better, at least they pretend to care to do something about it

Agreed. The fact that three people can wield so much economic and, thus, political power undermines democracy.

 

[Lutherf]

It's also in the $2 million they paid for the land. They tore down the building so in an arms length transaction, CVS valued the underlying property at $2 million. CVS then argued, and the court accepted, that the land wasn't worth the $2 million paid in an arms length transaction - literally the definition of FMV - but $500k or so, or one FOURTH what they paid. How does that make sense? That is simply a fair estimate of the FMV of that property, because that's what it sold for in an arms length transaction between willing buyer and seller.

Etc. You're just asserting your conclusion and basically ignoring that FMV is defined by the price of something between willing buyer and seller and at multiple points CVS valued the property to them at FAR more than the $2 million claimed only for property tax purposes...

And you're asserting that FMV can't ever change based on use, deterioration, or any other factors which might lower the FMV. Your basic assertion seems to be that FMV can never decrease but only increase.

Let me give you an example from my practice - In 1998 Client X purchased property on a main Tucson thoroughfare for his automotive repair business. The original purchase price was $250k and he made another $100k improvements to the lot and the building over the years. In 2012 he decided that he wanted to retire and prepped to sell the property along with the rest of the business. Part of the selling process was that he was required to have an environmental impact study performed. The study detected old, leaking fuel tanks underground (the property had originally been a gas station). While the property would not need to be rehabilitated as long as he owned it there WOULD need to be rehabilitation if it was sold. That pretty much killed the value of the property even though the business conducted on the property happily went along doing a million dollars a year or so.

 

[ttwtt78640]

But that's not what's at issue here. CVS literally argued and the court accepted that they paid $2 million for a piece of property - the underlying land - and it was only worth $500k. Assessment value is based on FMV, and it's the latter they're arguing is worth a fraction of what they PAID, and what they SOLD the property for in a sale/leaseback arrangement.



Again, those are all different issues. If you buy a house for $1 million, good luck when in the next month you argue for a property tax abatement because, no, that's not the FMV, it's actually worth $400k.... FMV is the price paid between willing buyer and seller. That is the definition of FMV.

The court ruled, effectively, that we'll ignore objective valuations of this piece of property and use subjective comps, of different property, and assume that CVS stores be valued at their lowest use, or some theoretical use not as a drug store, not their current use. It's bizarre.

Being "based on" and "equal to" FMV are two entirely different things - any attempt to equate them is simply being dishonest. I never attempted to say that assessed value (for tax purposes) is equal to FMV, in fact, I noted specifically why that is not done.

One could try to make the (reverse?) argument - that the non-sold properties have the 'comparable worth' of the most recently bought or sold FMV price. I agree that games are played with property's assessed value and have offered sound reasons why that is so - it lets a taxing authority raise more tax revenue without any need for (embarrassing and politically costly?) legislative action to raise taxation rates. That 'funny money' assessed value game can be used (as the OP noted) to offer perks to favorite campaign cash donors or those that do other favors for those with political power.

 

[JasperL]

Being "based on" and "equal to" FMV are two entirely different things - any attempt to equate them is simply being dishonest. I never attempted to say that assessed value (for tax purposes) is equal to FMV, in fact, I noted specifically why that is not done.

Yes, I know why it's not done and it's a different issue entirely. Here our house is assessed at something like 70% of value. OK, but they still determine a value for our house, which is supposed to approximate FMV of this house, today. Whether they assess it and levy the tax on 100% of that or 20% of that is not relevant.

CVS is arguing in court about the FMV of their property. That is the issue - not assessment value but current FMV. I cited the court case above if you would like to read it.

One could try to make the (reverse?) argument - that the non-sold properties have the 'comparable worth' of the most recently bought or sold FMV price. I agree that games are played with property's assessed value and have offered sound reasons why that is so - it lets a taxing authority raise more tax revenue without any need for (embarrassing and politically costly?) legislative action to raise taxation rates. That 'funny money' assessed value game can be used (as the OP noted) to offer perks to favorite campaign cash donors or those that do other favors for those with political power.

I was addressing the issue as the court addressed the issue. CVS and others are literally arguing that property they paid $4 million to acquire has a FMV of...$1.8 million. That the FMV of land they bought for $2 million is really....$500,000.

 

[JasperL]

And you're asserting that FMV can't ever change based on use, deterioration, or any other factors which might lower the FMV. Your basic assertion seems to be that FMV can never decrease but only increase.

Let me give you an example from my practice - In 1998 Client X purchased property on a main Tucson thoroughfare for his automotive repair business. The original purchase price was $250k and he made another $100k improvements to the lot and the building over the years. In 2012 he decided that he wanted to retire and prepped to sell the property along with the rest of the business. Part of the selling process was that he was required to have an environmental impact study performed. The study detected old, leaking fuel tanks underground (the property had originally been a gas station). While the property would not need to be rehabilitated as long as he owned it there WOULD need to be rehabilitation if it was sold. That pretty much killed the value of the property even though the business conducted on the property happily went along doing a million dollars a year or so.

I get that because he or someone else contaminated the property. CVS is essentially arguing on Monday they paid $2 million for some land, and a year later, after putting up a $2 million structure, the land they bought for $2 million is worth $500k because it's only worth $2 million for CVS and not anyone else, for any other use. But if that's the case, why did they spend $2 million on that property and not $500k?

That's just the land portion. Then they argue that putting $2 million of improvements on an allegedly $500k piece of property produces something worth....$1.8 million. Then they sold this property worth $1.8 million, for $4.5 million!

It's just nothing like your example. We can if we want quantify the cost of remediation for the hazardous waste, and obviously that's a reduction to the FMV.

 

[ttwtt78640]

Yes, I know why it's not done and it's a different issue entirely. Here our house is assessed at something like 70% of value. OK, but they still determine a value for our house, which is supposed to approximate FMV of this house, today. Whether they assess it and levy the tax on 100% of that or 20% of that is not relevant.

CVS is arguing in court about the FMV of their property. That is the issue - not assessment value but current FMV. I cited the court case above if you would like to read it.



I was addressing the issue as the court addressed the issue. CVS and others are literally arguing that property they paid $4 million to acquire has a FMV of...$1.8 million. That the FMV of land they bought for $2 million is really....$500,000.

That (bolded above) is what the court case seems to be about (what is the 'comparable' assessed value of that lot). If three 1 acre lots on Main Street are each assessed (for tax purposes) at $500K and one of them sold for $2M then either all of those comparable lots are 'worth' $2M or all of those lots are 'worth' $500K - to assert that only one of them has changed its 'worth' (assessed value?) is what is being argued in court.

 

[JasperL]

That (bolded above) is what the court case seems to be about (what is the 'comparable' assessed value of that lot). If three 1 acre lots on Main Street are each assessed (for tax purposes) at $500K and one of them sold for $2M then either all of those comparable lots are 'worth' $2M or all of those lots are 'worth' $500K - to assert that only one of them has changed its 'worth' (assessed value?) is what is being argued in court.

Right, but if that property CVS bought is only worth $500k as they assert, why did they pay $2 million? And if we accept that the property is worth $500k, then how does putting $2 million in improvements only increase the value by $1.3 million? And why did a buyer finance property worth $1.8 million for $4.5 million?

The argument is essentially that the property is only worth $4 million to CVS but its intrinsic worth is less than half that. I just find it almost surreal, because to get there the court had to ignore several ways we objectively measure the value of something - selling price in an arms length transaction - and use a bunch of subjective comps for not-that-property that indicate something other than the PRICE AT WHICH THE PROPERTY ACTUALLY CHANGED HANDS.

 

[ttwtt78640]

Right, but if that property CVS bought is only worth $500k as they assert, why did they pay $2 million? And if we accept that the property is worth $500k, then how does putting $2 million in improvements only increase the value by $1.3 million? And why did a buyer finance property worth $1.8 million for $4.5 million?

The argument is essentially that the property is only worth $4 million to CVS but its intrinsic worth is less than half that. I just find it almost surreal, because to get there the court had to ignore several ways we objectively measure the value of something - selling price in an arms length transaction - and use a bunch of subjective comps for not-that-property that indicate something other than the PRICE AT WHICH THE PROPERTY ACTUALLY CHANGED HANDS.

The problem with your argument is that equal protection of the law would seem to require that all similar value (FMV or otherwise) properties (often called 'comparable') should be taxed equally. I have already explained why fictitious values are preferred over the FMV (real value?) for taxation purposes. The effect of your idea (FMV must be used for all assessments?) would be to raise the property taxes by 400% on all such properties simply because one of them was recently sold for that (FMV) amount.

 

[JasperL]

The problem with your argument is that equal protection of the law would seem to require that all similar value (FMV or otherwise) properties (often called 'comparable') should be taxed equally. I have already explained why fictitious values are preferred over the FMV (real value?) for taxation purposes. The effect of your idea (FMV must be used for all assessments?) would be to raise the property taxes by 400% on all such properties simply because one of them was recently sold for that (FMV) amount.

No, it doesn't because those OTHER properties weren't sold for, e.g., $2 million. Who knows why some corner lot sells for more than another - that's why the actual sales price between willing buyers and sellers in an arms length transaction is presumed FMV, because it's those buyers and sellers who know the value and set the price.

 

[ttwtt78640]

No, it doesn't because those OTHER properties weren't sold for, e.g., $2 million. Who knows why some corner lot sells for more than another - that's why the actual sales price between willing buyers and sellers in an arms length transaction is presumed FMV, because it's those buyers and sellers who know the value and set the price.

That idea would 'lock in' the assessed value of (all?) property at its initial (or worse, reported) FMV cost. It is a very bad idea to let someone present a bill of sale for $2 and use that as the assessed value - they don't even allow that BS for a used car title/registration change.

How about this package deal? - I'll sell you my house for $4 and my favorite kitten for $400K? That makes the FMV of the taxable house $4 and the non-taxable kitten have a FMV of $400K - everybody wins but the tax authority.

 

[Juggernaut74]

How about this package deal? - I'll sell you my house for $4 and my favorite kitten for $400K? That makes the FMV of the taxable house $4 and the non-taxable kitten have a FMV of $400K - everybody wins but the tax authority.

That’s obviously not an “arms length” transaction, which was cited in every response by JasperL as the definition of Fair Market Value

 

[ttwtt78640]

That’s obviously not an “arms length” transaction, which was cited in every response by JasperL as the definition of Fair Market Value

My point is that the FMV of something is not what that particular thing sold for once upon a time (100 or even 25 years ago). That is why the concept of assessed value is used for taxation purposes - the assessed value can (and does) change even if no transfer of that thing (in this case real property) occurs. To assert that the FMV of a farm bought in 1893 remains unchanged and thus is the current FMV of that farm (unless re-sold like the farm which it borders) is absurd.

The assessed value, for taxation purposes, is usually some (lower) percentage of what similar (comparable) items cost at FMV. If every other (similar or comparable) lot and store on that street is now assessed at $500K then why should they not now be re-assessed at $2M which is what they could sell for at full FMV? The answer is obvious - it would require an instant tax increase of 400%. What usually happens in such cases is that all similar lots and stores will have their assessed values (for taxation purposes) bumped a bit over time spreading the taxation burden fairly equally over all taxpayers.

 

[JasperL]

That idea would 'lock in' the assessed value of (all?) property at its initial (or worse, reported) FMV cost. It is a very bad idea to let someone present a bill of sale for $2 and use that as the assessed value - they don't even allow that BS for a used car title/registration change.

How about this package deal? - I'll sell you my house for $4 and my favorite kitten for $400K? That makes the FMV of the taxable house $4 and the non-taxable kitten have a FMV of $400K - everybody wins but the tax authority.

Ok, but those just are not arms length sales - they're rigged sales. Here you're not arguing that what they paid for the land was NOT FMV or arms length. Or that there was some corrupt inflating of the construction costs.