3c hapter - Index of

42 Locavesting
to dodge their fair share of taxes, taking advantage of corporate tax
loopholes large enough to drive a Brinks truck through and offshore
tax havens that are little more than a post offi ce box. And the
taxes they do pay often abruptly vanish when the company decides
to close a plant or store or move to greener (cheaper) pastures.
The Local Multiplier
It makes intuitive sense that a robust independent business presence
benefi ts communities. And research backs that up. A strong
body of research dating back to the 1940s makes a persuasive case
that communities with a diversifi ed economy comprised of many
locally owned businesses have a higher quality of life, civic engagement,
and income equality than similar communities that are reliant
upon on a few large employers. 9
More recent studies have shown that money spent at a local
retailer, as opposed to a national chain, circulates locally rather than
being “leaked” out of the community to the coffers of a distant headquarters.
This economic boost is known as the local multiplier effect.
Civic Economics, an economic development consultancy, has
been at the forefront of measuring the direct and indirect benefi
ts of independent businesses on their locales. “Usually it’s an
emotional argument,” explains Matt Cunningham, a principal at
Civic Economics. “We thought there was an economic argument,
too.” The fi rm has conducted several studies since 2004 comparing
locally owned, independent merchants and service providers
with their national chain peers. In each case, the independents
generated more local economic activity—measured in wages, jobs,
local spending, taxes, and charitable giving—for each dollar of revenue,
up to three times more activity than the same dollar spent at
a neighboring chain. This is because a greater portion of their hiring,
purchasing, spending of profi ts, and charitable giving takes
place in the local area. The results are specifi c to each locale and the
types of businesses studied, says Cunningham, but “it’s defi nitive that
a locally owned business will keep more money local than a chain.”
The fi rm’s 2004 study of Andersonville, Illinois, a Chicago
neighborhood with a strong independent retailer presence, is often