Every community has their own collection of small businesses, many of them family owned and operated. We consider them as fixtures in our neighborhoods and it is painful to see them struggle in this tough economy. They face relentless competition from big box stores and on-line shopping. Shoppers are always looking for bargains and local merchants find it difficult to fight a pricing war. Loyalty to community and friendly service seem to be the most important characteristics of the successful local business, however, you have another important reason to shop locally: supporting your local businesses will keep your property taxes down.
It's easy to understand that sales taxes collected locally will help your local governments, but property tax help is more complicated. Residential property owners and businesses share the property tax burden. The higher the assessed value, the more you pay in property taxes. Commercial property owners have a higher level of assessment than residential and will pay two and half times as much for the same market value of property. This variation in assessment is a Cook County phenomenon and puts tremendous pressure on our Cook County businesses that are close to a bordering county. That is why the effort of Cook County Board President, Toni Prekwinkle, to bring down the sales tax is so important.
Commercial property is valued according to the income they produce, so when struggling businesses in Cook County close, they reduce the property value and the amount of taxes paid for that property. The assessed value of a commercial property is determined by the rent that is collected by the property owner. When a store front is vacant, the rent revenue stream is diminished. Since the taxing bodies are not lowering their levies, all the property owners that are left pay the lost tax revenue. For example: if a five-store strip mall that has five businesses paying an equal amount of rent then loses two businesses, the property owner can lose 40% of his income and be entitled to a 40% reduction in his assessed valuation for that property. Pay attention to those empty storefronts in your community. We are all paying that share of property taxes.
So when your local Chamber of Commerce encourages you to buy locally, remember that driving out of town to save a little money may cost you in your property tax bill. Save your local stores and save yourself some property tax costs.