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tv   Real Money With Ali Velshi  Al Jazeera  September 1, 2014 1:30am-2:01am EDT

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to work... >> how many of you get up at 4 or 5 o'clock in the morning to go out to the fields? don't miss our award winning series fault lines labor day marathon only on al jazeera america burger king is accused of quitting america and moving to canada, it's not the first brand to pull this tax trick. i tell you who else has done it and it's legal. making assistance. racial disparity in ferguson, missouri, two two-thirds of the residence are black, but one member of the city council is, i take you to the louisiana bayou to a small town at the center of a gas revolution. i'm ali velshi, and this is "real money".
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this is "real money," and you are the important part of the show, tell me what is on your mind. the fallout from burger king's deal to buy tim hortons, canadian company, is turning into a public relations nightmare. dick durban, the democrat from illinois blasted the $11.4 billion deal and said how disappointed he is in burger king's decision to renounce its american citizen. billionaire investor, warren buffet is in damage control mode over the tax rates. buffet is famous for calling on america's wealthy to pay their fair share to uncle sam. his participation puts him in an walk ward supposition.
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burg -- awkward position. >> burger king is the latest of companies to merge with a foreign firm - on paper. they operate in the u.s., but doing the inversion, they take advantage of lower tax rates outside the united states. burger king denies this deal is about denying uncle sam its due. it's merging with tim hortons , is says to open business visitas. it allows money to be transferred without paying u.s. taxes op income generated abroad. it's important for a company like burger king that plans to expand overseas. burger king will use the extra money to purchase assets and pay out stock dividends to shareholders. controversy or not, america is going to see companies like burger king, that choose to ditch uncle sam.
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and a lot of companies we think of as being gint essentially -- equipment essentially american are -- quintessentially american are anything but. many corporations moved their addresses abroad. some have high profile names you may know. many moving to bermuda and kayman islands where there's no corporate income tax. one is pricewaterhousecoopers, moving its corporate address to bermuda. before entering bankruptcy and acquired by warren buffet's company, fruit of the loom moved its corporate headquarters to the cayman island in 1998. lately more u.s. companies are using a technique called ipp version. it could cost the u.s. 20 billion in lost tax revenue. that is where a u.s. company legally arranges to become the
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subsidiary of a foreign based company and pay taxes to the foreign company, instead of the u.s. one of those, sara lee merged with de master blenders. an international coffee and tea company and has corporate headquarters in the netherlands. banana producer and a medical yis manufacturer will move corporate headquarters to ireland when their individuals mergers are complete. many companies say they are renouncing u.n. citizenship to avoid income tax rates of 35%. in the netherlands, it's 25%. canada, 15% and ireland 12.5%. critics say that companies use loopholes to avoid paying the 35% corporate income tax, and if they invert and relocate, they enjoy all the benefits of u.s.
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laws. the critics go on to say if congress reduces the u.s. corporate tax rate, it will rob the u.s. of more tax revenue, and ignite an arms race with other countries, lowering their tax rates too. for now policy makers are exploring options and bracing for a bigger wave of corporate defections and inversions. research into the companies entering the deals show that they significantly outperformed the s&p 500 on average, according to a white paper by a visiting assistant professor of act si at the university of illinois and has studied these deals for more than a decade. >> this is an interesting deal. there's good reason for burger
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king and horton's to combine. it's good examples of business synergies, but there is a structure formulated for tax considerations. it's both. >> what is the benefit? if it was a tax benefit, why a company headquartered in the united states for all of its history choose not to be? >> well, remember that tim horton's was owned for a long time by wendy's. it's clear to see there's advantages to a company whose primary focus in the market is breakfast, with a company whose focus is on lunch and dinner. burger copying has had gaps in its breakfast preparation to the market. so tim horton's office a good business sip ergey with -- synergy with burger king. >> let's talk about the idea that studies say the u.s. stands
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to lose a lot of tax revenue, if the idea of inversions accelerates. others say it will accelerate unless the u.s. changes tax laws. what are the laws in question that need to be changed in order to stop companies from taking things. >> well first, let me talk about the way we are structured. the u.s. stands alone among the industrialized nations in taxing on a residence basis. if you are a u.s. company, if your headquarters is here, and you are a resident in the u.s., that means that you must pay corporate tax on all the money that you earn, no matter where it's earned across the globe. if you are in any other major industrialized country, you pay tax based on source. tim horton's in canada pays tax in the jurisdiction where it operates. burger king is in the united states. it pays tax on all its income, no matter where it's earnt.
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when they combine, the joint entity would not want to subject tim horton's to tax globally, so they choose to combine under a corporation that is haired in cap -- haured in -- head quartered in canada. >> we here on tv that the corporate tax rates in the united states is high. canada is low. that's what it's about. if the u.s. lowers corporate tax rates, but what you describe is shifting from two kind of tax ram eems. >> -- regimes. >> that's right. the argument that the corporate tax rate is too high doesn't stand up to the evidence. belgium's corporate tax rate is 34%, almost the same as the united states. and we have got companies, incidentally companies by the
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same majority shareholder, burger copying, inverting to belgium. belgium does not have companies fleeing, they have companies going there. it's not just tax rates, but the broader picture of how we tax businesses in that county. illinois. two-thirds. population of ferguson, missouri is black. you wouldn't tell op election day. i'm hooking at ways to -- looking at ways to change that. and what to do with the glut of gas produced by america's fracking boom.
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al jazeera america presents, borderland labor day marathon >> we're all following stories of people who have died in the desert >> catch up with this ground breaking series... only on al jazeera america >> we have been talking about the dramatic event that unfolded in ferguson, missouri since the beginning of august, when 18-year-old michael brown was shot and killed by a white policeman. economic disparity between blacks and whites in this neighbourhood served as tinder for the riots that erupted after the shooting. important to note about the dynamics, two-thirds of the residents are black, five of the six members of the city council is white, and the down's police
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force is mostly white. look at this 6% of blacks tonned out in the moounize -- turned out in the municipal elections. it's different to ferguson, and turn out for national elections. in 2012 blacks and whites in the city turned out in number equal percentages for the presidential election. 54 for blacks, 55 for whites. that is true not just for ferguson, nationally the black turn over exceeded the white turn over. 66.2% for blacks, versus 64.1 for whites. rolean martins is the hosting editor of "news 1 now", and is a sinned kated column -- syndicated columnist. he thinks it's important that they show up more the municipal and not the national elections especially in the suburb. >> numbers bear out if you have 67% ferps in a --
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african-americans in a city, you think you would have formal representation on a school board or the city council. it's not the case. i call this invisible shackles. a lot of people believe their vote doesn't matter, that it's not going to make a difference. so for 21,000 people, 15,000 of the 21,000, or 18 or older, so you would think that you would see the different turn out. this tells me first and foremost that you do not have a real structure there when it comes to explain to people, voter education. we see this across the country. we see significant voters turn out or vote in the presidential election if you go to the u.s. senator, to congressional races, when you go down ballot. it drops down big time. people focus on the big races and the small races. they matter.
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>> in many cases they go to the president. >> this is not ferguson, but all over the country, polls show that a majority of people say their lives are more impacted by what's on the local level. a lot of people - i talked to reverend jesse jackson, and he talked to a group of men and said how many of would would love to be on the jury in officer darren wilson indict indicted. they wanted to. he said you know you can't be called to jury duty unless you are registered to vote. they stopped in their tracks. it's a group of people that don't believe they have power. they say look at what the cops are doing, look at the rules, $2.6 million of the income comes from court
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fee and fines. three warrants to every household in ferguson. >> that's where the suburban part of things come in. they have counties, munize palt your, and this is what a lot of african-americans complain. they are disproportionately stopped, three warrants per house - this is the way the up to raises money. >> they have to recognise the power is sitting in their hands. that's who you elect as your city council representative, and they hire the police and fire chief. this is an example of why you must have voter education, organization. you'll see people realise that they can't be silent or complain, they have to mobilize
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and organise to see the power. doesn't mean someone white can't lead, but you have to stand up and use your power. >> it doesn't mean the council of ferguson has to be two-thirds represented. >> 1500 voted, let's say whites win, i want to see more black folks vote. sa00 in total. i'd liv to se the study. if you are 57% bloc, what you tell me is you look at the noms, and you probably had -- numbers, you probably had an organised effort when it comes to white folks living in ferguson, you don't need a large number, because african-american are not turning out. seize the power. >> if a lot of african-americans moved out of the city, to the country, they are representers in ferguson, missouri as opposed to white residents who are home owners. does that make a difference in
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feeling like you are effected to your community and you show up to vote. >> it makes a difference, because the reality is home owners pay property taxers. you don't feel transient. when you own a home, you feel like you are a stakeholder and you have a different view of the community as opposed to someone that rents. that plays a role. when you look at jena 6 and trayvon martin, davis and this case here - at some point we must go from a moment to a movement. i believe this has exposed not just people's anger towards the police department and the incompetence of the city, it's exposed people who don't believe they matter. they have to be instructed you do matter, but guess what you have to show up, you have to go to council meetings, go to hearings, get registered. care about your neighbourhood
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and use the power of the ballot. voting is one process, the end of one process, the beginning of the other. vote for who you want but hold them accountable. >> fracking is producing so much natural gas, energy companies are looking overseas. >> the price of natural gas is europe. i'll tell you what that could do to your energy bill, coming up.
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>> it's a chilling and draconian sentence... it simply cannot stand. >> this trial was a sham... >> they are truth seekers... >> all they really wanna do is find out what's happening, so they can tell people... >> governments around the world all united to condemn this... >> as you can see, it's still a very much volatile situation... >> the government is prepared to carry out mass array... >> if you want free press in the new democracy, let the journalists live. america's energy boom i about to enter phase 2. too much gas is being produced by gassing. gas was $2.86. as the shale boom mixed up,
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prices were cut in half. if they stay low, that's the red, they could dampen incentives to drill. the production is the blue. a solution is to expompt some say that -- exporting. worst. >> reporter: on a louisiana bayou near the texas border, mosquitos and alligators mingle. this patch of wetlands is accustomed to sharing the real estate with petrochemical plants. a new project is under way, making this balmy hamlet the center of a revolution. a company is investing $18 million to retrofit import terminals, turning the focus from importing to exporting. at the mouth of the river, the terminals will liquify natural
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gas and ship to europe and asia by some time in late 2015. it's the first of its kind in the lower 48 state and a big sign that america as an mrge producer is joining the rehabilitation of those like qatar and saudi arabia. the -- joining the ranks of those like qatar and syria. lock in the rates, and sell gas overseas at a big mark-up. >> the price of natural gas is going down here, but not in europe. europe is getting the natural gas from russia, and russia is pricing it off the price of oil. it's $4.50 here. it can be $13 in europe. >> in eastern europe, if tensions flare, don't expect gas exports to change relines on european energy.
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not right away. >> most is not dedicated to the u.s. market. u.s. will follow the highest price market which is asia. >> not everywhere is eager for america to export. if you live in the states and heat with gas, the heating bill higher. >> there's a possibility that u.s. domestic gas price will increase after exports start. >> and price hikes could put pressure on manufacturing, surging in recent years, off comparatively cheaper costs. >> there's a lot of discussion within the country, within the industry about whether exporting natural gas is a good idea. they require it at a low price. will is concern that if it is exported, maybe the price goes from $4 to $8 in the united
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states, and comes down in other countries, and all of a sudden we don't have as much of a competitive advantage. >> american gas producers say without exports to reach new customers and driving up prices, there'll be drill. >> we have some areas in the north-west shutting down, enough. we know an abundant amount of natural gas. >> once america exports and prices go up. the shale deposits will increase supply and drive down prices. when prices go up. frack more to bring them down. it's a vicious circle, particularly for those concerned about environmental and health effects of fracking as more wells crop up across the
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country. russell gold is a senior reporter and author of "the boom", he said the u.s. is poised to become a major league energy exporter, but america doesn't have an energy policy. important. >> we have a lot of natural gas and increasing amounts of oil and there are competing demands and we haven't had a policy discussion about what to do with it. should we export it, promote manufacturing and jobs, and use it to keep electricity and expenses, and convert our car fleet to run on natural gas. there are a lot of possibility yes, and we are willy-nilly going along. >> we don't have a natural immigration policy, a lot of things we don't have. it's wishful thinking. let's talk about ab sent the policy the effect it hassle for consumers, when shen ear exports natural gas if 2015 deliberate
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deliberate there two ports now, there'll be about three, and in 10 years, 10 or 20. >> that's on the drawing board. i don't think we'll be past five or six. everyone is jockeying for position. there has been government and private sector analysis. they say the price goes up from a quarter to a dollar. natural gas is $4 per million btus. we could see up to a 25% increase, if a large number of terminals are built. it will have an impact. in the midst of sluggish any, we have enjoyed inexpensive electricity. we heat the whom. >> when your energy consumption price goes up in a household, there's nothing you can do about that. it has to come out of somewhere else. you have consumers having an impact.
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and we talk about industry. it loves low energy prices. it brought back manufacturing to america, and kept some from moving away from america, because heavy industry benefits from low electricity prices. tri loves that this is an -- industry loves that this is an area that opens arms and has low price stable gas prices. natural gas prices, a third in europe and asia, a great place to build a plant. if they look at it and say the price disparity is going to go away or we go back to a period of volatility, which we saw a lot of, that will scare them away and mean a lose of jobs. from a commodity perspective, it's weird. oil is the aim price at the price per barrel. natural gas isn't, we don't move
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it around as easily. >> to move it around, you need to build a pipe line, and we don't have a pipeline under the atlantic or put it into a giant ship, take it down to negative 236 degrees. the shin ear plant, the price tag is sa-20 billion. these are expensive facilities. >> let's talk about the situation in europe, they could use the natural gas, it's cheaper than russia's, and you could have sanctions that you wanted. you could put the screws to russia to stop expanding across eastern europe. they can't. we don't export it and they don't have enough ports to bring it in. >> building the ports is simple. to build the export terminal, it's so expensive you need long term contract. all the early terminals look to the global beers of choice,
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natural gas - korea, japan, and china. europe could step up, 10 years oat. by the time you build the terminals. the terminals built now, the gas is committed. >> absolutely. >> russell gold, a senior reporter at "the wall street journal". coming up in the week ahead i look at the riding cost of generic prescription drugs in america, and what could be done to ease the burden on people that depend on them. plus a look at the g.o.p. tax reforms. join me for "real money". that is our show for today, i'm ali velshi, thank you for joining us. >> now available, the new al jazeea america mobile news app. get our exclusive in depth, reporting when you want it. a global perspective wherever you are. the major headlines in context.
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