While Biden is presumed to be the winner of the Presidential election, 'fears' of a 'Blue Wave' have receded. Wall Street investors are relieved.
With Presidential candidate Joe Biden gaining ground in Pennsylvania, Georgia, and Arizona, and Nevada, it is likely that he is going to be the next President of the United States.
Wall Street has been warming up to this idea especially as it sees the Senate retaining a Republican majority.
As Wall Street investors revised their expectations of a “blue wave,” they pushed stock prices up. What worried investors were aspects of a liberal policy agenda such as more health care reform and higher taxes. Even if Biden hasn’t pushed the Green New Deal, he’s unlikely to be as lenient towards energy companies as Trump.
Wall Street investors were weary of sweeping changes in law that would harm the bottomlines of banks and energy companies. But such tax reform and other legislation is unlikely in the event of gridlock in Congress. It is likely that the House will be with the Democrats whereas the Senate will stay with the Republicans.
Wall Street Stocks Rise Expecting Biden Win But Without Blue Wave
The S&P 500 saw a large daily increase after months as pension funds, endowments and other big investors were buying stocks. Cigna, Anthem, and United Health rose more than 10 per cent reflecting the hope that a Republican-controlled Senate would likely block major healthcare reform such as a public option for health insurance.
Tech company stocks – Apple, Alphabet, Amazon, and Microsoft – also rose. Just on Wednesday, their price increases added several billions of dollars of wealth to their owners. Amazon’s Jeff Bezos gained more than 10 billion dollars during the day. Meanwhile, Facebook’s Mark Zuckerberg gained more than 8 billion dollars.
All billionaires across the board gained as well.
Prop 22 Win in California
One of the reasons for tech stock prices going up was the win for Prop 22 in California. Ride-sharing firms Uber, Lyft and DoorDash get an exemption from California state law requiring them to classify most of their workers as employees.
Uber and Lyft spent hundreds of millions pushing the passage of the proposition and they will be relieved.
Billionaires Battle Over Flat Tax Rate in Illinois
Meanwhile, in Illinois, a ballot measure that would have let the government change the flat tax rate has been defeated. Ken Griffin, billionaire founder and CEO of Citadel added more than $53 million of his own money to a campaign opposing the ballot measure. So, the flat tax rate of 4.95 per cent continues for now.
J. B. Pritzker, Illinois’ billionaire Democratic governor, added $56 million of his own money to a campaign supporting the ballot measure.
The ballot measure was about whether to repeal the state’s constitutional requirement for a flat tax rate.
Pritzker and other supporters of the measure had said that the graduated income tax would help earn $3 billion for the state and help fill up some of the state’s budget deficits. Griffin and his supporters, on the other hand, said that the ballot measure was simply going to let the state continue with its profligate ways of overspending, wasteful expenditures and corruption.
Biden’s campaign has promised more federal spending to counter the effects of the Covid19 pandemic. Griffin was a big supporter of the previous governor of Illinois.
Tough Words on Both Sides
Griffin had some tough words to say about Governor Pritzker: “I am not willing to stand by as, once again, spineless politicians try to sell a trick disguised as a solution. Particularly not from a governor who, having inherited a great deal of wealth, has worked so diligently to avoid paying taxes himself.”
Vote Yes For Fairness Chairman Quentin Fulks had noted: “If Mr. Griffin would like to explain why he thinks it’s fair that he pays the same tax rate as our nurses and grocery store clerks, that’s a conversation we welcome having.
Griffin continued in the email: “Not only does he hold a significant portion of his wealth in well-documented offshore trusts which pay no state income taxes, he even went so far as to remove toilets from his house in Chicago to achieve an appraisal at a fraction of the home’s value. A porcelain case study in irony.”
Thirty-two American states and Washington, D.C. have some form of a progressive income tax. Illinois, Indiana, and Michigan are among three of eight states that have a flat tax rate.
Mr. Griffin had noted in a statement that it was time for “the Governor and the legislature to focus on spending our money wisely to provide for better schools, better public safely, better infrastructure and greater opportunities for all our citizens.”
The defeat of the constitutional amendment ballot measure reflects the lack of faith of voters in Illinois in their politicians. It is not as if people do not want to pay lower taxes or cannot appreciate the logic of billionaires paying taxes at a higher rate than nurses, teachers or grocery store clerks.
The wealth of billionaires has risen while the rest of the economy was in doldrums because of the Covid19 pandemic.
The likes of Jeff Bezos, Elon Musk, Mark Zuckerberg, Sergey Brin & Larry Page and so many other billionaires have certainly benefited under President Trump. Large tech companies such as Apple, Amazon, Google, and Microsoft are all doing quite well.
The next four years under a Biden administration are going to be interesting.