In a recent article for Fox Business, Alfredo Ortiz, the President and CEO of the Job Creators Network, says a Joe Biden presidency would leave all Americans with thinner wallets. However, his presidency would also be particularly painful for small businesses.
Overall, we can expect “thinner wallets and anemic economic growth,” according to Ortiz. He adds that this may come “as more tax liabilities are shoveled onto individuals and small businesses.”
Undoing a Helpful Act?
Biden’s top priority, according to Ortiz, will be to undo much of the 2017 Tax Cuts and Jobs Act. This said act helped create the strongest economy in the last 50 years.
“The number one priority on Biden’s fiscal to-do list is to walk back key provisions of the 2017 Tax Cuts and Job Act,” Ortiz said. It “lowered tax rates for individuals and small businesses according to him. Ortiz also mentioned that it helped “ignite the strongest economy in half a century.”
This will include raising the income tax rates for both individuals and for corporations.
“Among the changes, Biden supports increasing the top income tax rate by seven percent — which is commonly applied to pass-through small businesses — and raising the corporate tax rate by a third.”
Burden on Small Businesses
This tax increase for small businesses will be particularly burdensome, says Ortiz.
“Small business entrepreneurs — who are responsible for two-thirds of all new job creation and employ 60 million Americans — would be forced to shell out more money to Uncle Sam, which would otherwise be set aside for payroll costs, overhead expenses and investment.
“When taking into account state and local taxes, some small businesses could be paying up-to a 50 percent marginal tax rate.”
He says this will be more devastating on small businesses than economic lockdown brought on by the coronavirus pandemic. It will also cause corporations to begin looking elsewhere to produce their goods. This may inevitably happen as the higher tax rates will make doing business in the US too costly.
“Companies that have flocked back to the U.S. to build factories and help restore America’s manufacturing sector will once again be gutted by corporate tax rates that are among the highest of our economic competitors—notably China.”
The laundry list of new or increased taxes will help the government collect nearly $4 trillion in new taxes. Ortiz says this will happen over the next 10 years.
“Other new taxes include a jump in capital gains tax rates, a lower limit on assets parents can leave to their children without being hit with the death tax and inflated Social Security payroll taxes for some individuals and businesses.
“According to the Tax Foundation, together, these changes would amount to $3.8 trillion in new taxes paid to the government over the next decade.”
Ortiz also says even that amount won’t begin to cover the bill for Biden’s expensive ventures. These include his foray into climate change and socialized healthcare.
“Biden’s public option health care proposal, for example — or as I call it, a pit-stop on the way to an even more expensive “Medicare-for-all” framework — would cost taxpayers $750 billion over the next decade. And his plan to tackle climate change has a $2 trillion price tag over the next four years.”
The Choice Is Clear
Ortiz says a second term for President Trump means a lower capital gains tax. It cuts or eliminates payroll taxes, and it also allows working Americans to keep more of their paycheck.
The choice is clear to Ortiz.
“Allowing working Americans to keep more of their own paycheck and curbing the double taxation ploy applied to money earned in the stock market is just what the doctor ordered to help shore-up the American economy and recover from pandemic lockdowns.
“The fiscal policy differences between Trump and Biden couldn’t be more stark. Your wallet and the survival of America’s job creators are on the ballot this November.”
Gold ‘Frenzy’ To Build Around Election, Platinum Could Soar 50% By Year-End
Peter Hug, head of the precious metal division at Kitco, believes the Fed’s decision to hold interest rates at near-zero through at least 2023 is bullish for precious metals and particularly gold. He also mentioned the road platinum can head to by the year’s end.
“About three Fed meetings ago they indicated they would hold rates at pretty much zero through the end of 2021 into early ‘22, today they’ve extended that by an additional year, there have been some analysts that are suspecting they will keep rates at zero right through 2024, so we’ve got another almost four years of zero interest rates to look forward to,” said Hug.
“The Fed being a bit more accommodative on inflation indicates to me that it’s a very positive environment for hard assets in general but I think the metals as well will continue to move higher over the next period of time based on the dovishness of the Fed, global central banks and the uncertainty of the US election coming up in about six weeks.”
The State of the Gold and Silver Markets
Hug said the current consolidation phase is a great sign of the overall health of the gold and silver markets. This comes after the frenzy in the gold and silver markets about a month ago.
“The market has been consolidating, which is a very good sign, especially for gold. Gold has been consolidating between our support level of 1925 and 1975 for the better part of two weeks. Silver seems to be between $26.50 – $27.50 range and consolidating as well. The fact that people are not selling into a market that is as frenetic as it was a month or six weeks ago, indicates to me that this market is setting up for the next leg higher once we get through this consolidation phase.”
Availability and Premiums
The gold and silver markets are taking a bit of a breather and the mania has slowed a bit. With this, Hug said the availability of gold and silver coins is getting better. He said premiums are coming down as well.
“On the gold and silver side, dealers are starting to show inventory. That’s not a result of increased production, it’s more a result because of this consolidation phase, retail investors have started to pull back on the markets so there’s not as much buying frenzy in the physical space right now, I think that changes if gold gets north of $2,000 again. But this consolidation of $50 range in gold and the $1, $1.50 range in silver has basically dried up the demand at these levels.”
“So production is still coming on board and dealers are starting to build inventory. And because of that you are seeing premiums come down. Silver maple leafs you can get, again, depending on quantity, somewhere between $5-6 over spot, Eagles are down somewhere between $5-7 over spot, so you are starting to see as this market stays sideways and we don’t see another rush into the buying side from the retail investor, you give it another 2-4 weeks and I think there will be reasonable inventory on the market and premiums should come down.”
Volatility to Return Soon?
Hug said that if you are looking to acquire gold and silver coins, you shouldn’t wait long as we could see volatility return very soon.
“I caution that past October 15 the market is going to be very volatile as we go into the election.”
Other than gold or silver, Hug sees a huge opportunity in the platinum space. There, he expects prices to climb 50% by the end of the year.
“I’m constructive platinum. It is also consolidating in the $900-950 range, but I do anticipate platinum to be north of $1000 and then look to $1200 possibly $1400 before year end.”
US Billionaires Got Richer During Pandemic by $845 Billion
US billionaires got richer during the pandemic by a tune of $845 billion. This represents a 29% increase from the time the Covid-19 lockdowns started until now. While the stock market crashed during the early days of the pandemic, it has since recovered. Along with recovery are net worth increases for America’s billionaire. Among the pandemic’s big winners of 2020 were Jeff Bezos, Elon Musk, and Mark Zuckerberg. Also in the list were investor Warren Buffett, Oracle CEO Larry Ellison, and ex-NY Mayor Michael Bloomberg.
RELATED: Jeff Bezos Is Now Worth $200 Billion
In a report released Thursday, the Institute for Policy Studies and the Americans for Tax Fairness (ATF) said the total net worth of 643 of the nation’s richest people rose from $2.95 trillion to $3.8 trillion.
This is equal to a 29% increase between March to September. The report based the numbers on Forbes’ annual billionaire’s report and real-time data.
Jeff Bezos, the founder, and CEO online retail giant Amazon is now the world’s richest man. The pandemic forced people indoors and played right into Amazon’s online strategy. As millions switched to online shopping, demand for Amazon’s services skyrocketed. Amazon shares zoomed along with 40% in 2020, as the company racked up billions in orders. People bought groceries, medicine, household products, and entertainment items on Amazon’s sites. As the company grew richer, so did its CEO and majority stockholder. On August 19, as stock prices of Amazon went up, his net worth exceeded $200 billion. As of September, Amazon stock has fluctuated and Bezos’ current worth is $184 billion.
Another rich guy that got even richer was Tesla’s founder and CEO Elon Musk. Tesla’s value grew five times its January price. By August, the company’s stock split pushed his personal shares to $104 billion. This allowed him to join the coveted centibillionaire club. Compared to his March net worth of $24.6 billion, he’s now over four times that. As of September, with Tesla dropping value, Musk’s worth has dropped as well to $88 billion.
Facebook’s Mark Zuckerberg, who was worth $107.6 billion in August (now down to $93.7 billion). Facebook stock rose from $209 in Jan to $303 in August, making his 13% stake worth over $100 billion. Like Musk, he also joined the centibillionaire club this year.
“COVID crisis supercharges inequalities”
Chuck Collins, director of the Institute for Policy Studies’ Program on Inequality, and co-author of the report said he was somewhat shocked by the figures. He added that the COVID crisis is “supercharging America’s existing inequalities.” He said, “I would have thought maybe six months into this that things would have shaken out – that everybody would take a hit.”
“The difference is stark between profits for billionaires and the widespread economic misery in our nation. It sort of dramatizes the unequal sacrifice and profiteering element of the wealth accumulation at the top.”
Meanwhile, Covid-19 infected 6 million Americans and killed more than 200,000. As businesses collapse, the economy outside of Wall Street is in recession. More than 50 million jobs vanished in the pandemic. At present, 14 million Americans remain unemployed. Even those lucky enough to still have jobs got hit. Average work income fell by 4.4.%, per Bureau of Labor Statistics data. Outbreaks are still prevalent, even as a vaccine remains under development.
As such, the economy’s reopening remains slow.
Even local governments are feeling the pressure. States and cities are hamstrung with crippling deficits. California declared a $54 billion deficit, while New York City is looking at a $9 billion loss in revenue. From now until 2022, state budgets face a $555 billion deficit. This is according to the Center on Budget and Policy Priorities.
COVID-19’s unique effect made those with better plans during the pandemic fares better than most. In the case of Amazon, people flocked to their site when going out posed safety issues. For the others, the rise in stock reflected more on how they handled their business during the crisis. Some people are just quicker to seize on opportunities, even those coming from a crisis.
Watch this as Bloomberg reported last July 2020 on how billionaires got $637 billion richer during the pandemic:
Should we begrudge the rich getting richer, especially at a time like this? Do they deserve this success? Let us know what you think by leaving your thoughts on the comment section below.
Fed Keeps Rates At Zero, Powell Says More Fiscal Support Needed
The Federal Reserve wrapped up its last meeting before the November elections. It announced that it would keep rates at essentially zero until at least 2023. This serves as a signal that it doesn’t see inflation as an issue at all for the foreseeable future.
Fed Chairman Jerome Powell said, “We’re going to continue to monitor developments, and we’re prepared to adjust our plans as appropriate.”
“With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved,” the Fed’s post-meeting statement said.
Uncertainty and the Stock Market
However, the Fed’s latest projections have core inflation staying below their 2% target until 2023. This leaves many observers unsure of the Fed’s actual plan to spur the inflation they desire. This uncertainty caused the stock market to drop after the announcement.
“He noted that targeting an inflation overshoot for ‘some time’ as the statement says, means that they are not targeting a ‘sustained’ overshoot. So how long is ‘some time’ if it isn’t sustained?'” asked AB economist Eric Winograd. “That imprecision is a problem that the committee is going to have to solve to reap the full benefits of the framework shift. It’s not a coincidence that the stock market, which had been in positive territory, flipped negative after the chair’s comments.”
“He’s the great and powerful Oz. Investors got duped. They thought enhanced forward guidance meant something, but when they peeked behind the curtain they realized the Fed didn’t do anything, and the market rolled over,” said Michael Arone, chief investment strategist at State Street Global Advisors.
Jon Hill, a senior fixed-income strategist at BMO, added “This is dovish – lower rates for longer, higher equities, weaker dollar. The Fed is saying we’re not hiking in 2023, maybe in 2024 … What they’re saying is these are our goals. We expect to have just barely met them and even then, they’re not raising rates.”
Stimulus and Economic Recovery
Stepping ever-so-slightly into the political realm, Powell said that Congress should pass another stimulus package to support the economic recovery. He then identified unemployment aid, small business relief and funding for state and local governments as three key areas.
“More fiscal support is likely to be needed,” Powell said. “The details of that are for Congress, not the Fed.”
Republicans have repeatedly stated that they won’t provide additional funding to bailout poorly managed cities and states as part of any additional stimulus bills.
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