Why Government Tax Incentives are Politically and Ethically Dangerous
The recent traffic jam at the Kentucky Speedway's first Sprint Cup race has demonstrated the dark side of government "economic development" practices that award influential political constituencies with tax breaks and incentives.
After years of millions of dollars of taxpayer investment in the racetrack and weeks of Governor Beshear touting the economic impact of the race, racetrack owner Bruton Smith is now attempting to extort more spending from Kentucky taxpayers:
Bruton Smith will unrepentantly wield the Kentucky Speedway traffic debacle for his advantage. Smith was an amusing, quixotic eccentric when he titled against NASCAR's power structure, but with that adversarial relationship largely gone since Brian France's ascension to the league chairmanship, the billionaire is revealed more each year as a hypocritical opportunist. In an awkward news conference at New Hampshire Motor Speedway this weekend, Smith eventually expressed sympathy for the scores of fans that never even made it into Kentucky Speedway's first Cup race because of woeful traffic mismanagement, but also strongly signaled that he would press for government-funded upgrades to I-71 although Kentucky Gov. Steve Beshear asserted that Speedway Motorsports Inc.'s traffic plan was the real issue. At worst, Smith had three years and data from 11 Nationwide races, 12 truck races and 11 Izod IndyCar series races to assess the impact of a crowd of 107,000 last weekend. (He claims the crowd was nearly 150,000). Smith also not so subtly hinted he could jilt all those ticket-buyers by taking the Kentucky date to Las Vegas if he wasn't appeased. Smith said unused tickets will not be refunded because "we don't want to." NASCAR could fix the whole thing by not awarding Smith the Kentucky date again next season. At least Smith would have an adversary his own size to wrestle again.
We hear from more than one observer that the parking operation at the speedway was asinine. Not to mention the inherent problems with the location.
Nonetheless, Smith will ask Kentuckians to spend our money to improve his racetrack, with the presumptive leverage generated by generating $150 million in commerce.
Now, I-71 is truly in mediocre shape, but this is a good example of how the government, in choosing to use taxpayer resources to help the Kentucky Speedway profit may become beholden to it.
If you think that's extortion, guess what would happen if the Kentucky state government became dependent on hundreds in millions in revenues from expanded gambling.