EDITOR NOTE: Tech billionaires and the wealthiest investors got a boost this week following the majority of the election results. California Prop 22, protecting the right of gig economy workers to remain independent, gave both Uber and Lyft and its shareholders a nice surge. Plus, it appears that we’ll not be seeing a Democratic majority in the Senate, making it difficult for Biden, should he win, to pass measures targeting the wealthiest Americans. Tech has been far outpacing the broader market on a year-to-date basis. And with the Fed’s backstopping, the market has been far outpacing the fundamentals of the broader economy. The former is reasonably sustainable; the latter likely isn’t.
Despite lingering uncertainty over the U.S. election, the country’s ultra-rich already have plenty to celebrate.
Tech billionaires in Silicon Valley saw a hotly contested ballot question on the employment status of gig workers pass in their favor, while an Illinois measure to swap the state’s flat income tax with a graduated system went down in defeat after Citadel’s Ken Griffin spent millions to oppose it.
Across the board, the 167 U.S. billionaires also gained $57.4 billion on Wednesday as investors bid up stocks, sending major averages to the biggest rallies in five months. Amazon.com Inc.’s Jeff Bezos led the way with a $10.5 billion gain, while Facebook Inc’s Mark Zuckerberg added $8.1 billion.
The victories cap four years of robust gains for the country’s wealthiest people. During President Donald Trump’s first term, the richest U.S. residents added both wealth and stature thanks to surging equities markets and a raft of tax cuts. The net worth of Americans on the Bloomberg Billionaires Index went from less than $1.8 trillion on election night in 2016 to more than $2.8 trillion in late October.
The big tech win was the passage of Proposition 22 in California, a ballot measure to exempt Uber Technologies Inc., Lyft Inc. and DoorDash Inc. from a state law requiring them to classify most of their workers as employees. The win sent Uber and Lyft shares soaring in New York trading, giving a boost to the fortunes of some of its largest shareholders.
Garrett Camp, co-founder of Uber and the only executive of either ride-sharing firm on the Bloomberg index of the world’s 500 richest people, saw his fortune climb almost $350 million to $3.4 billion.
The ride-hailing and food-delivery companies backing the measure poured a record $200 million into the campaign. That spending will likely pay off for many of the companies as Uber and Lyft alone will save more than $100 million annually on employment costs, according to one estimate.
In Illinois, Griffin sunk $54 million in a campaign opposing the tax change, while Governor J.B. Pritzker, a Democrat and Hyatt hotels heir, spent more than $56 million supporting its passage. The measure was rejected by 55% of voters.
“The citizens of Illinois have delivered a clear message to our political leaders in Springfield,” Griffin, whose trading and asset-management firms are based in Chicago, said in an emailed statement. “Now is the time to enact long-overdue reforms to save our state from fiscal ruin.”
Griffin is worth $20.4 billion while the Pritzker family collectively has almost $30 billion, according to the Bloomberg Billionaires Index.
The election also dealt a win to some of the country’s wealthiest as Republicans picked up seats in the House of Representatives and are expected to maintain their control of the Senate. Those majorities could thwart efforts by a potential Joe Biden administration to pass measures targeting the highest earners, such as tax hikes or changes in estate tax laws.
Despite Wednesday’s big gains, not everything came up aces for Zuckerberg on election night, including a California ballot measure that would have allowed taxes to be raised on commercial properties with much of the money earmarked for education. Zuckerberg and his wife Priscilla Chan spent millions trying to get Proposition 15 passed, but as of Thursday morning, support for the measure was lagging with about three-quarters of the ballots counted.
Still, the billionaire with most at stake in the election is probably Trump, whose path to a second term now hinges on the battleground states of Nevada, Pennsylvania and Arizona.
Originally posted on Bloomberg