Publisher's Note: Taxes and local spending
By Jody Reese
Spring is here and, if you’re fortunate, your federal tax refund is also here or at least on its way. And then there are the federal government’s “economic stimulus” checks, which could mean as much as $600 per person when they arrive next month.
Let’s set aside for a moment the insanity of an income tax system that holds onto an excessive amount of your hard-earned wages, only to give it back to you later as a “refund,” in some cases more than a year after you earned it, and without interest.
No — today, let’s take a minute to at least savor our tax refunds and the coming stimulus checks, and ponder what to do with all that cash.
Spend it or save it, your choice. But if you spend it, I encourage you to help the local economy by patronizing businesses that are locally owned.
Why? Because money spent with local businesses is more likely to stay in the community longer, causing a “multiplier effect” that generates significant economic activity in the local area.
A dollar spent with, say, Wal-Mart will not do as much for southern New Hampshire as, say, a dollar spent at Zyla’s in Merrimack.
Need proof? Consider a study of local buying patterns done in 2004 in Andersonville, Ill. Here’s an excerpt from the Chicago Tribune story covering it:
“For every $100 spent in 10 locally owned shops studied there, $73 stayed in Chicago’s economy. For every $100 spent in a chain with comparable products, $43 appeared to stay, according to the study by Civic Economics, a firm that penned an often-cited 2002 report comparing a chain to a local bookstore in Austin, Texas.
“The Chicago study found that money spent in local stores stayed local because employees were paid more, owners used more local goods and services for their businesses and contributed more to local charities.”
Other studies have been done, all proving the same point: money spent with businesses with roots in the community helps the local economy more than money going to businesses controlled by out-of-town (and sometimes international) conglomerates.
In the coming weeks, many of the big guys will mount expensive ad campaigns to encourage you to spend your refund and stimulus checks with them. Sony, for instance, is launching a campaign in hopes that you’ll blow your windfall on a high-def TV.
You’re free to do that, of course. This is America, and we all like TV. But I ask you to consider the local guy, even if it’s not a big refund check purchase. Often, you’ll get competitive prices, better service and you’ll boost the local economy, too.
And if you think bigger is better, just look at the system of how the federal government collects your income taxes.