Obama, Taxes and the NASCAR Effect

I was driving down the road the other night, listening to the Phil Valentine show on the radio. He mentioned a news item that I found rather intriguing. So I gave it some thought.

It seems that some people in NASCAR are worried about an Obama presidency. I checked around and could not find any source for this, but it did get my mind going on the topic. Taken logically, it does make sense that they would be worried.

Obama has said that his economic policy would be to tax the wealthy (top 5%, according to his statements about tax cuts for 95%) and close loopholes. Since that would be a tax increase on corporations, they would have to look for ways to cut spending in order to keep their bottom line healthy and provide dividends to shareholders. In order to do this, corporations would have a few options.

They could cut jobs. This could be seen as cold and heartless, but when has corporate America been seen as anything but? This would not really "hurt" their image, but it may not be the smartest move from a purely business standpoint. So, it would probably be a last ditch effort.

They could cut corners and save some money, though this would only be a smart move if you were, say, a company in China. So, not a real good chance of this happening. I mean, can you imagine a steering wheel coming off a car as it traveled down the road if the manufacturer only used two screws instead of four? Yeah, probably not going to happen.

They can cut salaries of the senior . . . .yeah, like that is going to happen.

They can also do away with any expenses unnecessary to the immediate concern of the business. Like sponsoring Little Billy' softball team, or holding a company picnic, or giving to charities (remember the loopholes thing?). Or they could cut sponsorship of a NASCAR car. I mean, just how much is being gained by Home Depot or Sprint from sponsoring NASCAR?

Okay, so corporate sponsorship goes away for NASCAR. What is the big deal, you ask? Well, without sponsorship, there is no money to spend on the very necessities of rading; engine parts, tires, gas, et al. If this happens, racing goes away.

If you are not a NASCAR fan, or a fan of any auto racing in this country, you may be wondering what the big deal is. So what if there is no NASCAR, you ask?

Okay. Well, the drivers wouldn't make any money. But they probably have enough if they saved. The pit crews would also not make any money. Nor would the suppliers, announcers, track officials, track maintenance, advertising companies, concession stand owners, janitors, parking lot attendants. Getting the picture?

Don't forget all the towns that depend on race income to survive. Sure, maybe Daytona Beach can survive without NASCRA. Can you imagine what else towns like Bristol, VA or Talladega, AL have to offer besides racing? Without this income, racing towns will have to make deep cuts. And this can lead to more job cuts within local administrations. And these jobs have nothing directly related to NASCAR, yet they will be affected.

Remember I mentioned ad companies and suppliers and concession stands above? Well these are the small businesses that Obama wants to help and encourage. But he just doesn't see how interconnected everything is.

With corporations getting tax hits, in turn cutting non-business related expenses such as NASCAR, this will trickle down to affect a lot more people than just big business and NASCAR drivers. Can you imagine a janitor at a high school being laid off because Obama wants to tax Exxon-Mobile more? It could happen.

And this is just one trickle down effect of Obama's tax plans; one industry (NASCRA) being affected by corporate expense cutting. What about all the charities that big business gives to? With "loopholes" being closed, there is no real incentive for businesses to give away money if it is not directly related to their bottom line. Cancer research and firefighters and children of killed or disabled veterans or the local kids' sports team can all be big losers.

This is just one unintended consequence of a politician's ideas of sweeping economic reform without really understanding how business works, not only in America, but in the world.

And the ironic thing about all this? Not only did Barack Obama sponsor a car at the Pocono racetrack during the campaign (as an advertising gimmick to reach more voters), but he recently received the endorsement of a NASCAR legend, Junior Johnson. I guess Junior didn't think this through any more than Obama did.

See what happens when you have too much time on your hands? You start thinking about stuff.

Get out on November 4th and vote, its not just a privelege that more than half the world does not share, it is a responsibility.

Sources:

Obama-Biden Website

http://www.barackobama.com/issues/economy/