tv Ali Velshi on Target Al Jazeera January 18, 2016 9:00pm-9:31pm EST
luther king day was filled with meaning and contemplation. and that is our news for this hour. thanks for watching. i i'm david david. ali velshi "on target" is next. >> i'm ali velshi. "on target" tonight. the troubling truth about taxes in america. rimp peoplrich people really doa whole different set of rules. soaking the rich is back in style for democrats. the latest example is hillary clinton's proposal to slap a 4% surcharge on annual income above $5 million. that would effectively raise what are known as marginal tax
rates on wealthiest individuals not seen in oafn 4 over 40 year. a tax brac tax bracket for the , 39.6%, only the income above that level is taxed at this rate. clinton's campaign says her so-called fair share surcharge would bring in over $10050 billion over th -- 150 billion r the course of ten years. but not just addressing income inequality or raising revenue for government but about changing the perception that she's too cozy with wall street banks. that is a few perpetuated in part by her rival bernie sanders, making life uncomfortable for clinton by hammering those banks and saying
income inequality as quote the great moral issue of our time end quote. clinton's surcharge idea is judges her latest attempt to persuade liberal democrats she shares their feelings, targeting the rich by collecting more money in estate taxes and by raising taxes paid by investment fund managers. now whatever her true motivations are, clinton is tapping into a very real feeling, a very real sentiment among americans that the system isn't there. a gallup poll last year found 63% of all american adults say money and wealth should be more evenly distributed in america. among democrats it's 86% and in terms of what to do about the problem gallup found that 52% of americans now agree that the government should redistribute wealth by, quote, heavy taxes on the rich, end quote. that is the highest since gallup started asking this question in
1998. but what candidates say about taxation on the rich during a presidential campaign and what happens after an election, are rarely the same thing. even, even if hillary clinton is america's next president, the chances of her millionaire surcharge getting through a republican congress are slim to none. and one reason for that is that wealthy americans can also buy influence in congress. mary snow has that story. >> when presidential candidates talk up their tax plans a key part is how they'll tax the super-rich. >> it reduces or eliminates most of the deductions and loopholes available to special interests, and to the very rich. in other words it's going to cost me fortune. >> the buffett rule says rich americans pay at least 30% income tax rates, instead of 10,
15, 20, even further. >> a flat tax that everybody pays, flat and fair. what that means is that hedge fund billionaires no longer pay a lower tax rate than their secretaries. >> i think it's appropriate to ask the wealthy to pay their fair share of taxes. >> the relative low taxes paid by the richest americans, the average tax rate they pay has dropped since the 1990s when bill clinton was president. the tax rate was 30%, it dropped to 17% by 2012, a year after that it climbed to 23%. still, that's less than the 25% paid by single taxpayers earning between roughly 37 and a little more than $90,000. but here's the thing. it's the u.s. tax code itself in laws approved by congress that allows the wealthy to reduce how much they pay uncle sam. >> if by sort of tax break or
loophole we meant something that no one knew was in the system and rich taxpayers hired lawyers to ferret it out, that goes on but what's mostly going on is rich individuals are taking advantage of tax preferentials that were deliberately inserted into the tax code. not accidental. >> case in point is capital gains taxed at a lower rate than income from labor. and one big source ever controversy is carried interest acknowledge an investment firm earns when investing for clients, taxed at a lower rate. and offshore cayman islands and luxembourg, where the super-rich can park their money. while lawyers can come up with sophisticated tax techniques they can also buy influence. >> if you take campaign finance and you take tax law creation and you put them together it's
not a pretty picture. because what you see are really rich people giving a lot of money to members of congress and those members of congress protect, you know, creating tax preferences that rich people enjoy. >> and even though those tax preferentialpreferences are a sf debate, the tax law, will change, with regard to how much rich people pay. >> mary snow joins me now. >> the tax breaks under george w. bush's 2003, new taxes opportunity affordable care act. so the rate did go up significantly for the top taxpayers. however critics still say there are too many breaks for real estate tax holdings. >> just to be clear we are talk about policy prescriptors.
the things that wealthy and superwealthy are doing many is legal about. >> that is legal. where the gray area is, the wealthy being able to afford advisors who come up with strategies, their goal is to pay the lowest possible taxes right? where the gray area comes in. maybe some of the strategies are aggressive, testing the irs, the irs doesn't have enough resources to see if these are all really legal. >> a tale of two tax systems, one for very rich and one for the others. i'm looking at what is really fair, coming up.
>> according to benjamin franklin only two things are certain in this world, death and taxes but how we are taxed is the great debate. joining me is a man who says the country should tax its most wealthy, more than it is now. art laugher may b joins me from nashville. art, good to see you again. >> you've finally got the topic that needs to be discussed by all of is, really important. >> initial thoughts. >> mary hasn't got the half of it yet but got the good half already. the rich pay a lot less than even she says. if you look at warren buffett, he paid $7 million in taxes with about $13 billion in income.
6 schsh/100th/100ths, only whenu realize it when you collect it, he never realizes it, he owns berkshire hathaway stock. totally correct. what you got do is lower statutory tax rates, so it gets into all these loopholes. i did jerry brown's flat tax in 19 nee 92 whic 14 which would he eliminated all of this garbage. as long as there is differential tax rates, you see them buying into one or the other. >> i need to fully understand what you're saying. you are talking about the idea if the tax rates were lower overall, people who are not realizing, not cashing in on the stock, might do so to pay the taxes at a lower rate and would all be fair? >> if there were no differential tax rates and no cayman islands,
they would never hire those lawyers, look at how many people in the obama administration have switched jobs with goldman sachs? what the heck do you think they're doing ali? they are going over to goldman sachs and taking advantage of the rules they wrote when they were in the treasury. it's corrupt to the core. ukraine or north african or the other places you know -- >> you don't want to tax the rich id than the poor. do you agree that tax and capital gains are skewing the situation? >> absolutely. everyone should pay their taxes fair an squares if it was a fair system. jerry brown proposed a 13% flat tax on all income, how much you earn, how much you give away and your increase in wealth that's your income and you pay 13% and everyone does from beginning to end and you'll get tons of money, you'll stop getting all these lawyers and accountants,
favor-grabbers and we'll have a society that finally lives on morality and really work. >> should we be thinking differently about someone like me who earns their income through labor who earns it and gets a check from someone versus someone who invests their capital takes remarkable risks, raises money? >> no. >> as far as you believe, everyone should be taxed on what they earn. >> from the first to the last dollar, and if you help people use spending. write a damn check to them ali and they will then know exactly what they're getting from what they are. but that's the way honesty does it and transparency does it and we're losing the race here. we're becoming an oligarchic society like the ukraine and other places. it's not right ali. >> when we talk about you being the father of supply side economics, that doesn't work in an oligarchic society all that well. >> no it doesn't.
warren buffett as i told you, paid 6/100ths of his income in taxes. you guys are finally get it. when you see a group of people hanging with obama don't think it's street people trying to describe what it's like being poor, but people trying to get favors. they have been very, very successful with obama believe me when i tell you. >> i like having you here whether you agree with me or not but let's say this, this flat tax system, or some variety of it, let's say somebody earns $20,000 a year, do we still think they should be paying x percentage of their income in that? they're going to be a net recipient of government benefits. >> of course they should be. they should be taxed the same rate. if you want to help them write
them a check. tax rate, spending tells people what to do. don't try to include positive incentives in a negative system. what about people who aren't on the codes there, let's say families with kids and you get someone who doesn't file tax return? why should you do a tax treatment for children where you don't hit everyone who has children? >> you're saying tax them tall same way and give back to those whom society decided to give back to. >> that's what you're supposed to do. it's perfectly transparent and everyone knows what we're doing correctly fairly and the way we want to do it. i'm not against helping the poor. i am against trying the create loopholes in all of this stuff so everyone can circumvent it and no one understands what's going on. that i'm against. >> fair enough. how much influence can a presidential candidate or a president for that matter actually have on the economy?
>> phenomenal. ronald reagan had a huge influence on it correctly. and then you had people like jimmy carter and like obama and w hurt it dramatically. frankly we need a low rate broad based flat-rate tax so you provide the least incentives to evade avoid paying income. close these loopholes in the cayman islands, close these loopholes what are they are, especially the unrealized capital gains. that is killer of all killers and no one pays any tax on that not a dollar. >> i live in new york, i know gristides very will, are you run a radio show and i think i heard that you said that the gop presidential candidate may win 45, 46 or 47 states in the general election. i got to tell you your home state of california and my home
state of new york i'd have to grow hair before they vote democrat. you got massachusetts, you got maryland -- >> don't bet your bottom dollar. >> i don't think how you get to 45 states. ohio, virginia, do you really believe that? >> take a look at what hillary clinton and bernie sanders are saying. they don't understand taxes. she was saying we should use the buffett rule. buffett wants to raise taxes he doesn't pay and not realize them when in fact the ones he does pay.you know he's really -- i mean it's just ridiculous going along with a person like that who's using hillary as a tax dodge and i think that's really wrong. at least the republicans if you look at them, trump, cruz, rand paul, all of them. they want lower base, and then we have a tax code that can collect revenues and sen it the
way that's socially responsible. >> who's the best one for you? >> i think they are all in the midst of the process and i don't have a winner yet but i'll talk to you later on it. >> arthur laughert. we'll see you after the election. >> raising tamps to when they don't think they're right, they yu ir use their influence to get around it. they can buy things you and i can't. >> a former economic advisor to president ronald reagan, the chairman of laugher investments. coming up the dark side of cheap oil, take it from me, the reality isn't always pretty.
>> u.s. oil prices have dipped below $30 a barrel for the first time since 23, 12 years, that's great news for american drivers and consumers who are enjoying gas prices below $2 a gallon but very cheap gasoline, worldwide an estimated 250,000 jobs have been lost since oil prices started falling from their 2014 high of $107 a barrel and the
steep drop also means financial losses for millions of americans who ion oil company stocks in their retirement plans and many investment portfolios are also suffering because the stock market has a brutal beginning to the year. founder and research chairman of the leed group. stephen, good to see you, thanks for being with us. >> thanks ali. >> very happy with this oil in the $30 range oar lower, my gas prices are cheaper than they've been in a very long time. what's wrong with keeping it like this? >> because you're basically producing oil below cost. all the excess oil you may have now, it's not that much. it may be a million barrels or so, it doesn't take much excess
to create a calamitous decline. we may be 1 million barrels that are excess right now. many more barrels are being produced at a dramatic loss. not one fracking company this this country are profitable, on a cash basis, some of them are losing more per year than their companies are worth. >> well, someone will say that was the goal of the saudis. >> it could have been part of the goal but on the other hand, fracking was never a long term solution for energy production in the country. everyone knew this, huge depletion rates, relatively few basins to frack from, and somewhere 2020, 2021, you're going to peak in frack and you want to come down. now what i'm saying about losers is $107, $110, $105, the
frackers were still losing money at those prices. fracking was never a long term solution. the saudis have enough oil in the ground that they can continue to produce relatively cheaply for the next 30 years. >> oat $30 a barrel you can't -- at $30 a barely of barrel you can't in west texas, you draw ohole straight in the ground and oil shoots up, you're still making a little bit of money on that? >> right except for one thing, in saudi arabia, their budge their all-in cost for oil, when you count for the fact they have to protect their oil fields surrounded by shiites and so forth, supporting their populace and keeping things calm, estimates are that their all-in cost are something like 80 to $100 per barrel and that's why you see the saudis borrowing money which they never had to do or rarely had ever had to do and
basically going through burning up their reserves and you know, running huge massive deficits. this is not sustainable for them. >> let's talk about the world. you've got saudi arabia they're running a deficit, the gulf countries are all starting to run deficits, this has hit venezuela, iran, russia, but also norway and mexico. >> and hit the u.s. tremendously. what people don't realize ali is that oil yes maybe 250,000 jobs lost within the oil industry. but oil has tremendous tentacles. rail traffic is way down. in order to frack it takes a tremendous amount of energy just to get that energy it takes massive amounts of water. massive amounts of sand. a lot of labor. and it's not cheap. it's not like a five or $10 per item, commodity. it could be -- you could need
almost as much energy in total as you duet from the fracked oil. so it may not be economic at any price. >> right. >> i mean one reason they've been able to continue to drill not surprising, oil -- the cost of extracting oil has gone down and some people have managed to make use of it. >> right. >> and the reason those costs have gone down: because oil's gone down. copper's gone down. all the metals have gone down. because they're all dependent on oil. oil's tentacles extend everywhere. >> you and i have been talking many, many years, the last time we talked, 12 years ago, oil was going up. there was an argument made by alan greenspan that the benefit to the consumer, the benefit that accrues to the consumer, outweighs thing negatives to the larger economy, including oil stock and oil workers.
do you think that's true? >> i think it's true for countries that are simply consuming oil. >> i get it. >> what is the part of the world that has all of a sudden the best economic statistics? maybe china still has the best economic statistics but the area that has come from the poor man of the developed world instead of the leading man of the developed world is europe, for us it was probably in many ways our most vital industry. even though we wert generating net energy from it, we may not have been -- >> but a lot of people were employed throughout the recession. >> it circulated money throughout economy. now you cut that out. rails have gone to pieces. so many people that produce sand, people that produce water. i mean these have mult multiplie
effects. for someone who wants to buy something at walmart, et cetera, it's completely dependent on oil and financing industry, it's not good for america to see a huge major industry basically shut down. even if the industry wasn't producing very much, this is sort of like producing a lot of copper. if -- it's sort of like if you needed ten tons of copper to produce nine tons and you kept doing it and doing it and doing it, okay, a lot of people that are directly dependent on copper are going to get killed. but people that like cheap copper they're going to benefit. in this world right now, producing oil at these prices, doesn't really benefit anybody other than the europeans. >> we'll end up seeing layoffs, people's stocks getting hit. ask you with a topic? you know a lot about you've written a lot about. alternatives, solar wind
alternative forms of energy nobody is motivated to invest in those. >> this is exactly right, now you're dependent on a climate debate. whatever you might think it's still up in the air as to what's going to happen in that kind of debate. the one bright thing here if i can make reference to a movie that's out here is the big short. what you're seeing now in the oil industry is something that's highly irrational. what saudi arabia from an economic point of view makes no sense. to continue fracking makes no sense. when this reverses it's going to reverse in such a way that it's going to be unbelievable. >> this is a big conversation we're going to have it many times. stephen leib is lead researcher at that time leib group. that's it for the show here on al jazeera america.
>> we're here to fully get into the nuances of everything that's going on, not just in this country, but around the world. getting the news from the people who are affected. >> people need to demand reform... >> ali velshi on target. >> for some reason as she was working this is what he did. withwolf whistles). the more peep that hear the story, the true story, no matter if you know nothing about the south, you knew that was long, you thought that child was brutalized that way.