October 19, 2020
written by Net Advisor™
MANHATTAN, New York. Democrat vice presidential candidate, Sen. Kamala Harris (D-CA) said Wall Street has backed Biden. Should you be concerned?
https://twitter.com/JxhnBinder/status/1314031544344940545
Why Wall Street is Backing the Democrats.
The U.S. financial markets, especially financial media hate that China is having to pay tariffs on exported goods. China does exactly the same on U.S. imported goods to China.
These tariffs reduced profit for businesses (including the government) of China. Businesses invested in those China companies make a little less money. Some would rather just have no tariffs on any country and let the free market play out.
The Free Market Isn’t Really Free.
I worked in the financial industry for a considerable time. I used to think like most on Wall Street that the general idea was: Let the “free market” play out. However, I have learned that markets are anything but free.
Markets are greatly influenced by government regulations, costs of doing business, taxes and controls that are not uniform across nations.
Wages are also different across countries. How does one country with $7-15 hour wage with worker safety regulations, compete with a country with say 50 cents to $3.00 an hour wage, and almost no worker safety regulations?
How does one country with high business taxes compete with another country offering lower taxes?
If one is a big Wall Street company generating say $10 Billion in annual revenue. If one can move their business to another country to save just five percent (5%) on taxes alone; that’s $500 Million in extra profit each year.
If one is conducting that business in a foreign country, say China; you’re no longer subject to U.S. laws, not subject to U.S. regulations, and pay no U.S. taxes. You’re only subject to taxes and regulations (if any) in the host country.
In the U.S., most companies (56.4%) help pay for their employees’ healthcare, and many have retirement plans. This has helped American employees save roughly $29.2 Trillion in 2018.
In say China, companies don’t have to, nor are they given any incentives to pay for employee healthcare, let alone a retirement plan; or deal with labor laws, or worker rights, etc.
Thus, if one wanted to rule by free market, most of the jobs and industries would be attracted to countries with cheaper labor, overall lower production costs, lower regulations and low taxes.
Leveling the Playing Field.
President Trump saw the imbalance and took actions to help level the playing field. This drew businesses to come back to the USA; along with massive regulation cuts and lower taxes.
This created a massive economic boom in the USA that benefited low income, minorities, and middle class the most (Report 1)(Report 2).
In 2019 alone, some 50 international companies have exited China.
Biden Tax Hikes.
Wall Street stands to make a lot more money by shipping American jobs back overseas, especially if taxes and regulations are resumed in the USA.
If Biden wants to kill U.S. jobs by raising taxes and massive new regulations, this risks making the U.S. economy so weak and poor, few would want to do business in America (Report).
Joe Biden has promised to do away with the Trump tax cuts, which will impact all Americans not just the ‘rich.’
The “rich,” like Biden, have all kinds of ways to shelter their money. They won’t be hitting the poor house anytime soon.
But those in the lower income and middle class, would likely see layoffs, and higher prices at the retail level just for starters (Report).
About the author:
Among the author’s work, Net Advisor™ previously held 9 (nine) financial industry licenses with multiple areas of specialization & supervision; including work as a Risk Management Consultant. Net Advisor™ does not work for, nor receive any financial or other consideration from any political party.
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