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September 2020 SEPTEMBER 2020 F i n d i n g A l p h a I. WHERE BIDEN STANDS ON THE 1 S KEY ISSUES T N II. HOW THEME PARK OWNERS 7 E HAVE ADAPTED TO THE T PANDEMIC N III. $2 TRILLION OF SUSPICIOUS 13 O ACTIVITY LEAKS AND ITS IMPACT ON FINANCIAL C MARKET F IV. TECH WAR TENSION 18 O BETWEEN CHINA & U.S. E L B A T Fall 2020 Chief Editors: Ethan McTavish and Jashveer Karan Reesaul S E P T E M B E R 2 0 2 0 S E P T E M B E R 2 0 2 0 Where Biden Stands on the Key Issues By Johnson Shih, Market Research Analyst Tax The Biden plan raises revenue in 10 ways, not really united by much of a conceptual theme other than a desire to primarily hit wealthy investors. Biden proposes to increase the corporate tax and raise the tax rate on the rich, which would precisely hit technology stocks and the redistribution of wealth would benefit the industrial, material and financial sectors, which is the Figure 1 Biden's Tax Plan opposite of the substantial tax cuts during President Trump's administration. As the U.S. presidential race continues until November 3rd, Biden purposed to increase the corporate tax rate on large corporations from 21% to 28%. [2] Previously, he had also stated that if he was to be elected, he would increase taxes from 37% to 39.6% on American families with an annual income of more than $400,000. [4] If Biden’s tax policy was to be implemented, it would have a profound impact on the U.S. stock market. Technology stocks that have soared before (Amazon, Apple, Microsoft, Facebook, Google’s parent company Alphabet, etc.) may be affected significantly. According to Penn Wharton's budget model, annual revenue of more than $400,000 in the United States accounts for only 1.8% of income earners. Nonetheless, If Biden’s tax reform plan is implemented, the federal government’s tax revenue is expected to increase by $4 trillion from 2021 to 2030, and 75% of the new tax revenue will come from the top 1% of the nation’s wealthiest families. While Biden's tax reform program seems to benefit the 98.2% of American households and small business groups below the threshold, the impact of Biden's tax increase proposal goes far beyond this [4]. 1 Tax economists estimate that raising corporate tax rates would affect all income classes. In the short term, those who hold shares in the aforementioned technology companies would be affected. In the long run, the increase in taxes would limit the growth of corporate profits and further impact workers' salaries. Jobs, Employment & the Economy In response to the direct impact of COVD-19, Biden vowed to spend "everything needed" to extend loans to small businesses and increase direct payments to households. These proposals include: [7] 1.Additional $200 monthly increase in social security payments 2.$10,000 student loans forgiveness to waive federal loans. 3.Raising the federal minimum wage to $15 per hour 4.Invest US$200 billion in green energy, on the grounds that advocating green manufacturing helps working-class union workers. 5.Invest US$400 billion to purchase local goods, and a broader commitment has been made to implement "Buy America" laws for new transportation projects. Biden had previously been criticized for supporting the North American Free Trade Agreement (NAFTA), with critics claiming that the agreement shipped jobs overseas. His 2020 plan requires the federal government to invest $300 billion in materials, services, research, and technology made in the U.S. economy. Healthcare Biden said that he would expand the public health insurance plan that he passed under President Obama’s leadership and would implement a plan to ensure that an estimated 97% of Americans are covered. Although Biden did not propose a universal health insurance plan as more left-wing members in the party would have hoped. After all, Biden promised that all Americans would be able to participate in a Medicare-like public health insurance program that would provide medical benefits. The medical insurance age for the elderly has also been reduced from 65 to 60. A non-party organization responsible for the Federal Budget Committee estimates that the entire Biden plan would cost $225 million in 10 years. [11] Biden said that he would prohibit medical staff from charging patients out-of-network fees when patients could not control the medical staff they saw, such as emergency surgery or ambulance transportation. However, the candidate is not sure how he would end this practice, in which case, $40 billion would be saved each year. [8] 2 Payers like a way to be charged for out-of-network services based on a benchmark, such as the average medical insurance rate for that service in a specific geographic area. Biden also plans to "actively use (government) existing antitrust agencies" to deal with rampant market concentration, which may cause prices to fall. The specific details are not yet clear, but this may only mean instructing the Federal Trade Commission to take a strong stance on future mergers and acquisitions by payers and providers. The Biden Plan would allow Americans to import prescription drugs from outside the United States, thereby expanding their access to affordable drugs. By increasing competition, this move would prevent companies from setting high prices that many consumers expect. Furthermore, pharmaceutical companies would lose tax deductions for advertising purchases. In addition, Biden’s policy of limiting drug price increases to the rate of inflation would fundamentally impact the profitability of brand-name drug manufacturers. Also, Biden has proposed to decriminalize marijuana possession, legalize medical marijuana, and allow states to formulate their own policies. Proponents of drug policy reforms are in favor of finding alternatives to imprisonment for drug abuse, but they generally disagree with mandatory treatment through drug courts, which continues to put health issues under the jurisdiction of the criminal justice system. More importantly, they put pressure on Biden's campaign to adopt a stance in favor of the legalization of marijuana and pointed out that the vast majority of Democrats are in favor of implementing drug reforms. According to Reuters, after the news of Biden planning to decriminalize marijuana if elected, various stocks related to the cannabis industry on the Nasdaq market surged. Some of these companies include cannabis stock tracker MJ ETF (MJ.P), which rose 5.5%; Tilray Inc (TLRY.O), which rose 19.2%. In addition, the stock prices of Canopy Growth Corp (WEED.TO), Aphria Inc (APHA.TO) and Aurora Cannabis Inc (ACB.TO), which are listed in the United States, were 10% to 13% higher than normal closing prices. [10] Climate Change Biden referred to climate change as an existential threat and said that he would convene the rest of the world to join the "Paris Climate Agreement" to act faster to curb emissions. President Trump withdrew from the agreement which promised that the United States would reduce greenhouse gas emissions by 28% by 2025 as of 2005. [6] 3 Although Biden does not fully accept the Green New Deal (the climate and employment plan proposed by the party’s left wing), he proposes a $17 billion federal investment in green technology research, some of which overlap with funds in his economic plan and are budgeted for the next 10 years. [6] The investment would help the U.S. achieve net zero emissions by 2050, a commitment made by more than 60 other countries back in 2019. The other two largest carbon emitters, China and India, have not yet joined this pledge. These investments coincide with his economic plan to create employment opportunities for manufacturing "green energy" products. Biden also promised to impose new federal drilling limits, refuse to increase fossil fuels and emphasized his commitment to the American electrification. "I will immediately insist that, in fact, we have established 500,000 charging stations in cooperation with the governors, mayors and others in the United States of America in order to achieve the full development of electric vehicles by 2030”. [3] If Biden’s policy is implemented, it could dampen the oil industry’s hope for a rapid recovery from this year’s collapse, and his proposed new drilling restrictions may stifle production and make the country more dependent on foreign supplies. On the other hand, the emphasis of Biden’s policy on clean energy would benefit specific companies in the power sectors focused on renewable energy. 4 Immigration Biden hopes to restore many policies adopted during President Obama's presidency. One of his policies is to provide a path to citizenship for undocumented immigrants and a path to fast citizenship for farmworkers. The former Vice President will also consider withdrawing funds for the border wall, which he supported when he voted for the Security Fence Act in 2006, instead of using these financial resources to improve security at ports of entry. Biden also promised to resume the Deferred Action for Child Arrival (DACA) program that President Trump hopes to end. DACA was introduced under the leadership of President Obama and allows the deferral of immigration rules for undocumented childhood immigration to the United States. Education Biden hopes to restore many policies adopted during President Obama's presidency. One of his policies is to provide a path to citizenship for undocumented immigrants and a path to fast citizenship for farmworkers. The former Vice President will also consider withdrawing funds for the border wall, which he supported when he voted for the Security Fence Act in 2006, instead of using these financial resources to improve security at ports of entry.
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