Sunday, December 07, 2008

Now You Should "Give Local" Too?

Bruce Hetrick writes in the Indiana Business Journal:
Giving to non-local charities can do double damage. While these organizations may, indeed, be worthy, their worthiness goes elsewhere unless those good causes employ local people and return benefits to those in need right here at home.

The point is this: When you do your holiday shopping at a local store or make a year-end gift to a local cause, you’re not only giving generously to those you most care about, but also triggering a ripple effect. Your locally invested dollars support organizations that pay local taxes, buy or lease local property and employ local maintenance workers, construction workers, etc.

Those workers and their employers, in turn, pay even more taxes, and do business with your organization, and make contributions to your favorite causes, etc.
Finally, our local governments use all that tax revenue to police our neighborhoods, pave our streets, promote job growth and otherwise make our collective livelihoods possible.
If the buy local crowd wasn't pretentious enough with their zero-sum mentality for you, meet the "give local" crowd. They even see one as a form of the other...buying local is a charity case! Let's evaluate this new charity aspect of the buying local scam?

Claim #1: Buying local carries its own economic benefit.
See the previous link on the buying local scam. Intellectually bankrupt for 230 years and counting.

Claim #2: Buying local means paying local taxes.

So let me see, I can buy my Pizza from corporate Pizza-Mart or the locally owned and managed B-Town Pizza (both are fiction). To operate, they both pay (in the accounting sense) property taxes, wage taxes, and sales taxes. They are also both paying taxes on whatever income is earned at that establishment. Either way you pay into local taxes.

Now, the corporate chain might have lower prices, and therefore lower tax bills. Fine, but instead of paying higher prices so that you contribute more taxes, you could buy the cheaper product and just directly donate the difference to the local general revenue fund. You'd have the same out of pocket payment, but more would end up in the local treasury.

Hetrick alludes to the comparison of shopping online vs. buy from a local establishment. Online purchases might have $0 tax bill to the local. Fine, but then you could still just donate the price savings directly to the local government, if it is so important to you. There is a very good chance the local government would end up with more under this scenerio as well.

Claim #3: Giving charitably locally
There is nothing inherently wrong with choosing a local charity over a non-local one, but chances are you are not maximizing the good you can do with your charity, especially if you are an American. Your charity dollars go much further if you donate to those living in developing or 3rd world countries (Consider the websites KickStart and Global Giving). Otherwise, begin crafting your argument for your neighbors being more important and more in-need than than poor foreigners.

Update: Josh Hall sends me an old Landsburg slate article, which is on charity.

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