Buying Local Boosts Tax Revenue and Builds Stronger Communities.

Supporting small, local businesses doesn’t just feel good, it’s a smart investment in your community’s bottom line. These businesses use space more efficiently than big chains, generating more tax revenue per square foot. 

A Massachusetts study found that big-box retailers actually cost the local economy about $468 per 1,000 square feet each year, while Main Street-style small businesses return about $326 for the same space. These figures are calculated by subtracting the cost of providing public services like road maintenance and public safety to each type of land use from the tax revenues they generate. More tax revenue means more investment in local schools, infrastructure, and public services for communities. 

Research from the Sonoran Institute compared property tax data from nine communities in Colorado, Idaho, Montana, and Wyoming, and found that mixed-use, downtown properties generate about five times more revenue per acre than single-use, big-box developments. Compact, multi-story buildings make more efficient use of limited land and often connect to existing infrastructure, which reduces the public costs of roads, utilities, and public safety services. This is how small, local businesses create dense, walkable cultural centers that benefit the local economy and quality of life. 

There is also the issue of tax fairness. A Good Jobs First report found that large retailers in many states keep a portion of the sales tax they collect as compensation for processing it, costing state and local governments more than $1 billion each year. Walmart alone retains over $70 million annually from this practice. Because taking advantage of such policies requires costly legal and accounting work, small businesses typically cannot, and likely would not, use these tactics.

If we want thriving downtowns, stronger tax bases, and a fairer local economy, the choice is clear: buy from small, local businesses over big box chains.

Sources:

Fiscal Impact Analysis of Residential and Nonresidential Land Use Protoypes, Barnstable, Massachusetts, July 2002 

ABOUT TOWN: Building Revenue for Communities, Shaping the Future of the West, Sonoran Institute, 2012

Skimming the Sales Tax: How Wal-Mart and Other Big Retailers (Legally) Keep A Cut of the Taxes We Pay on Everyday Purchases, Good Jobs First, November 2008