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YOUR MONEY

A Taxing Time; Business Come Out for Gay Rights

Aired March 1, 2014 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CHRISTINE ROMANS, CNN HOST: Swiss bankers under fire for helping clients evade the IRS. And a Republican who wants the rich to pay more in taxes.

I'm Christine Romans. This is YOUR MONEY.

Maybe the 1 percent really are under attack. This week, top executives from Credit Suisse hauled before a Senate committee. They blamed rogue bankers for helping 22,000 U.S. clients hide $12 billion from Uncle Sam.

But some bank employees are pushing back, saying tax evasion was a business strategy, not an anomaly. Not helping the credibility of Credit Suisse, the bank's top brass still won't reveal the identities of its rich, secret American clients.

(BEGIN VIDE OCLIP)

ROMEO CERUTTI, GENERAL COUNSEL, CREDIT SUISSE: The banking secrecy probation prohibits us from furnishing any client names.

SEN. JOHN MCCAIN (R), ARIZONA: So, any real idea that the government of Switzerland is cooperating with us is a joke, right? If we get 230 names out of 22,000 accounts.

(END VIDEO CLIP)

ROMANS: Of course, it's not just Credit Suisse. The Justice Department is investigating 13 other banks for helping clients evade taxes.

Well, what about evading taxes the old fashion way through legal loopholes? Around the corner on Capitol Hill, House Ways and Means Committee Chairman Dave Camp unveiled his tax reform plan. It would lower tax rates for everyone, but impose a surcharge on the rich, reduce the cap on the mortgage interest reduction and scrap the so- called carried interest loophole worth billions to private equity venture capital and hedge fund managers.

So, is the game really changing for the 1 percent?

John Avlon is a CNN political analyst and editor-in-chief for "The Daily Beast".

Stephen Moore is chief economist for the Heritage Foundation and a contributor to "The Wall Street Journal". All right. John, the Credit Suisse allegations right out of a spy novel. A quarter of a million dollars in pantyhose, wrapped around a woman to try to get an elevator secretly operated by bankers? The rich always -- will they always find way to get out of taxes or are those days coming to an end?

JOHN AVLON, CNN POLITICAL ANALYST: It is like a James Bond novel, no question. The rich will always try to find a way to reduce their tax burden. That is the privilege of being rich. You can hire a lot of people who find fancy ways to hide your money. And it is part of the business strategy, let's be honest, of these banks.

The problem is technology makes transparency really difficult to hide money. You can't just scroll away cash in a safety deposit box in Switzerland, hope no one ever finds it again. There are digital trials.

So, yes, the rich will keep trying to hide their money and evade taxes, but the technology makes it tougher to do.

ROMANS: All right. So, Stephen, a Republican, Dave Camp, proposing higher taxes on the rich, taking an axe to that sacred Wall Street tax break. Has hell frozen over, my friend?

(LAUGHTER)

STEPHEN MOORE, THE WALL STREET JOURNAL: Well, you know, look, I actually agree with what you and John are saying. I hate tax shelters. I hate tax evasion and loopholes. You know what's kind of exciting about what Chairman Camp came out with this week and I hope, by the way, this would be something both parties could really rally behind, is get rid of all these special interest loopholes, get rid of the expensive tax lawyers and accountants that find ways for people to evade paying their, quote, "fair share".

And you know what? When we did that back in 1986, that's the last time, Christine, we cleaned the stables of the tax system, because you closed a lot of the loopholes, we lowered rates, but guess what? The rich paid a higher share of the taxes. They paid more taxes.

So, this is a good way to get more money out of rich people and make the tax system more pro-growth and make it fair.

By the way, I was looking at some polling, Christine --

ROMANS: Yes?

MOORE: The one thing that Americans want from the tax system is fairness. I think a kind of flatter system without loopholes is fair to all Americans.

ROMANS: Yes. Oh, it would be easy to get that done. Tax reform is so easy.

The rich are already paying more. John, I want to -- I mean, the top rate is now up. It's 39.6 percent. Capital gains rate is up to 20 percent. Higher Medicare taxes -- I mean, that's coming for rich people. Limits on deductions.

How much more do liberals want?

AVLON: Well, look, there is a reality behind every stereotype. Some folks on the far left really do see taxation as a positive good.

So, those folks do exist, but I don't think it represents the vast majority of folks in Congress right now.

Stephen was talking about Dave Camp's bill. You now, it should have bipartisan support. Both parties have talked about tax reform.

This is a bold plan. The fact it is being called DOA by party leadership, in large part because of (INAUDIBLE) loophole, which has made the donor class outrage, and everyone cowered in fear, that's a really fundamental problem.

ROMANS: All right. So, Stephen, it's not just the rich jetting off to Switzerland to try to get out to paying what they owe. The survey this week really got my attention, 12 percent of Americans say it is okay to cheat on your taxes. Another study finds 26 of the most profitable U.S. corporations paid little or no income federal tax from 2008 to 2012.

So, Stephen, my question to you -- is tax avoidance as American as apple pie?

MOORE: Well, there's a difference, by the way, between tax avoidance --

ROMANS: And evasion.

MOORE: -- which is legal, that's finding loopholes and taking advantage of them. And evasion, which is actually, you know, skirting the tax laws.

This is the problem I have with the system. I mean, Americans spend so much money, I think, close to $200 billion a year, trying to find these tax loopholes. It's a very unproductive activity.

Just think if we could actually hire those accountants and lawyers for expanding our markets and making America more efficient country. So, I really like the idea of closing these loopholes. John was right.

I would just add one thing. You know, you've got a beehive of special interests in this town of Washington, D.C. where I live. They're going to fight this thing to the tooth because the power in Washington, guys, emanates from the tax code.

ROMANS: There's no question about that. You even talk about getting rid of the mortgage interest deduction or capping it for wealthy Americans and real estate industry goes crazy. So, every single one of these loopholes, every deduction, every little cookie in the tax code is something to be fought for.

Guys, thank you so much. Nice to see you. Have a great weekend, Stephen Moore and John Avlon.

All right. One of the world's largest bitcoin exchange files for bankruptcy. Give me 60 seconds on the clock. It's "Money Time".

(BEGIN VIDEOTAPE)

ROMANS (voice-over): Bitcoin blunders. Trading web site Mt. Gox taken offline this week. It could mean the loss of more than $400 million worth of bitcoins. The collapse spooking investors and threatening the future of the digital currency.

The Tesla Model S is the "Consumer Reports" top rated car for 2014. The stock also top rated by investors, up about 70 percent this year.

Beware the fine red envelope. Netflix spoofs Amazon in this ad. The drone to home delivery option, a jab at Amazon's plan to deliver packages to your door with small unmanned aircraft.

Would you eat this for breakfast? Taco Bell taking a run for McDonald's with its new breakfast menu available until 11:00 a.m., a half hour longer than Mickey D's. The most important meal of the day, profitable and a new front in the fast food wars.

And Paula Deen is opening a restaurant in east Tennessee this summer. Her first venture since her sponsors dumped her in droves, after she admitted in a court case she had used a racial slur. Her fans, they never left.

(END VIDEOTAPE)

ROMANS: You could be paying for Obamacare on your restaurant tab. Diners at eight Florida Gator's Dockside restaurants now see this extra charge on their bill. The company says the 1 percent surcharge will help cover the cost of insuring full-time employees.

Some of the world's biggest brands coming out this week to support gay rights in Arizona. But are companying waving the rainbow flag just to make some green? That's next.

(COMMERCIAL BREAK)

ROMANS: From Sochi to Uganda to Arizona, as the fight over gay rights intensifies, some of the world's biggest brands are getting pulled into the fray. First in Russia where anti-gay laws outraged activists. Big advertisers, companies like Coca-Cola, McDonald's and Visa, they face an Internet hate storm for sponsoring the Olympics there.

But just this week in Arizona, another big controversy. Politicians and businesses lining up to opposed SB-1062. That bill would have given companies the right to refuse service to gays and lesbian people on religious grounds. Apple, American Airlines, AT&T, Intel, they all signed statements opposing that state measure.

The host committee for next year's Super Bowl which will be played in Arizona expressing concern as well. Arizona's Governor Jan Brewer vetoed that bill on Wednesday night.

And, finally, in Uganda, a harsh new law makes some homosexual acts punishable by life in prison.

In an interview with CNN, the country's president called gay people, quote, "disgusting".

Virgin Group Chairman Richard Branson who says officials from Uganda asked him to do business in the country. He's now calling for a boycott.

(BEGIN VIDEO CLIP)

RICHARD BRANSON, CHAIRMAN, VIRGIN GROUP: My initial reaction is I didn't want to do business with Uganda. I felt that countries giving money to Uganda should withdraw those moneys. And I'd rather spend that money in countries that treat their people decently.

(END VIDE OCLIP)

ROMANS: I want to bring in Richard Socarides. He's a writer for "The New Yorker." He's also an attorney, a political strategist and longtime gay rights advocate.

John Berman is my co-host on CNN's "EARLY START".

Richard, does these companies really care about gay rights? Or is this all just good PR for them, for them, for their American consumers, it was a good thing for them to stand up on Arizona?

RICHARD SOCARIDES, WRITER, THE NEW YORKER: I think more and more countries do really care about gay rights because they see that in order to attract the top talent, they have to support equality for everybody who works for them.

ROMANS: So, this is a business proposition for them?

SOCARIDES: I think it is motivated by business. I think that -- you know, there are a lot of things emerging around this issue. So, each one of these issues, Russia, Uganda, Arizona, we all have to look at separately what was going on.

But ultimately, I think companies will make a business decision and they'll support equality because they think it's good for business.

ROMANS: Arizona was different because it was at home. This is something that happened at home.

Russia, you know, some of these companies paid a lot -- $100 million to be sponsors. But they didn't really stand up and say, we don't like the way you're doing business, Russia.

JOHN BERMAN, CNN ANCHOR: You know, in a way, this question goes back thousands of years. You know, the philosopher Plato asked, isn't it actually good in and of itself and also for its consequences?

ROMANS: Look at him quoting Plato.

(CROSSTALK)

BERMAN: I'm not sure it matters, because if it's good for its consequences here, if the businesses are doing this just because of the bottom line, it may not matter. What it means is a society has moved so far along, that it affects their bottom line, if they don't act a certain way. So, if you are a supporter of gay rights, it may not matter to you why the businesses are doing it, as long as they are doing it.

ROMANS: So, let me take it a step further. Say, gay rights are part of human rights. You care about human rights. You've got Apple saying specially, we don't think -- we don't like what's going on in Arizona.

Yet, Apple products are made in a place where if you say "democracy" online, you can be thrown in jail.

So, here's my question, where do you draw the line?

SOCARIDES: Well, I don't think it is a clear line yet. I think a clearer line is emerging for companies like Apple.

Now, certain, a company like Apple or other tech companies, Google, you know, they are considered progressive. And their employees are considered aggressive.

So, a lot of tech companies, in Washington state, when they introduced marriage equality, recently, a lot of the tech companies there played a big role in helping usher that in. So, if it's in your backyard and it matters to you as a company, I think companies are going to play increasingly big roles. But some of these old line companies who do business globally have bigger challenges.

You saw, you mentioned the Olympic sponsors, a big challenge for them. They did not -- they have policies for their U.S. employees which prohibits discrimination. But they did not want to be seen as causing trouble for the IOC, because the IOC was their partner.

ROMANS: Yes. And their big international far flung multinational companies -- John.

BERMAN: You know, it's one thing when it's affecting your boiler room. That's what's affecting a lot these companies. They're concerned not just about talent. People they are hiring.

When people go into the stores and start to stop buying their products because of where they may make them, I think that is where you start seeing some action.

I don't see that happening yet. The manufacturing goods with iPhones, I don't think consumers care where it is made.

SOCARIDES: As public opinion shifts, not only in the U.S. but globally, more companies are going to be acting. ROMANS: Well, in Uganda, the public opinion is not shifting yet. I mean, sometimes, when you look at what's happening in this country and you look at other places around the world, and it's almost -- it is almost unbelievable the polar opposites they are.

We're going to talk about that again later. Thanks, guys.

Richard Socarides, quoting Plato, John Berman -- show off.

BERMAN: Bringing it.

ROMANS: All right. Coming up, race and the Oscars.

(BEGIN VIDEO CLIP)

DAVID OYELOWO, ACTOR, "LEE DANIELS' THE BUTLER": When a black actor wins an Oscar or is nominated, I think Hollywood sometimes doesn't know what to do with them.

(END VIDEO CLIP)

ROMANS: Why this year's Academy Awards may be different.

(COMMERCIAL BREAK)

ROMANS: Tomorrow night is the 86th Academy Awards, but this year's Oscars are entirely different.

Zain Asher joins us now from Hollywood.

Hi, Zain.

ZAIN ASHER, CNN CORRESPONDENT: Hi, Christine.

You know, this year is unprecedented because you have a black actor or director basically represented in every major category but it's not just about critical acclaim. It's also about box office. You know, movies like "12 Years A Slave" and "The Butler" cost less than $30 million to make but they've just made back well over $100 million.

Now, as you know, my brother played the lead in "12 Years A Slave", but I wanted to see just how much things have changed for black actors in Hollywood and what challenges still remain.

(BEGIN VIDEOTAPE)

ASHER (voice-over): She was the first black woman to be nominated for an Academy Award for best actress. Refusing to be typecast, Dorothy Dandridge, vowed never to play a slave on screen. Ten years later, acting roles had dried up, and Dandridge was dead of a drug overdose with little more than $2 to her name.

OYELOWO: When a black actor wins an Oscar or is nominated, in my opinion, I think Hollywood is sometimes not knowing what to do with them because the path isn't clear. ASHER: Of the nearly 3,000 Oscars that have been awarded since 1929, fewer than 30 have been given to people of color. Many of them for roles based on true stories, therefore could never have been played by white actors anyway.

GILL ROBERTSON, FILM CRITIC: It's not likely Leonardo DiCaprio could play Nelson Mandela.

OYELOWO: One of the ways black people get to play the lead is literally where there is no competition.

ASHER: David Oyelowo played Louis Gaines in "The Butler," a movie about an African-American White House butler who served eight American presidents.

Pam Williams, one of the producers, says that some investors refused to fund it unless she gave the white actors bigger roles.

PAM WILLIAMS, PRODUCER, "LEE DANIELS' THE BUTLER": One potential investor asked could we give the butler a white best friend. I don't think the investors we went to were racist when they said these things. I think again they buy into the myth that is white people want to see white people onscreen so how can we put more of them into a black movie to make it more acceptable.

ASHER: And more marketable. According to Rentrak, a company that tracks movie ticket sales, only five predominantly black movies have made over $100 million domestically.

(on camera): And then there's the issue of audience. African- Americans make up just 11 percent of frequent moviegoers while white Americans make up 56 percent.

PAUL DERGARABEDIAN, SENIOR ANALYST, RENTRAK: There are a lot of movies aimed at a specific audience and don't necessarily try to reach out to a broad audience. So I think that crossover appeal is important.

OYELOWO: You know, with "The Butler", we started out with a predominantly black audience and in the second week in the box office, it shifted that there were more white people going to see the film.

ASHER: But movie critics say the shortage of African-American roles that Dandridge witnessed in the '50s is still a problem today.

ROBERTSON: Until black people are willing to invest their own money, we're going to have to settle for what we get.

OYELOWO: A role that Ryan Gosling could play, I don't see why I shouldn't be considered for if race isn't an issue.

(END VIDEOTAPE)

ASHER: And as David mentioned, it really is all about improving the types of roles that black actors are offered beyond just, say, the sidekick, or the (INAUDIBLE). I think if Dorothy Dandridge was looking down on Hollywood today, of course, she would be impressed that things have improved but there is still work to be done -- Christine.

ROMANS: When you think of how far we've come since those days. Like you say, how much work is still to be done, it will be -- it will be a wonderful, wonderful event no matter what on Sunday night. Thanks so much. Good luck to you. Bye.

Coming up, the bizarre, the changing face of Facebook, an industry giant's hanging on for dear life. Samuel Burke delivers the tech Oscars. The envelope, please. Next.

(COMMERCIAL BREAK)

ROMANS: All right. Three thousand miles from the red carpet but in full Oscar spirit, CNN technology correspondent Samuel Burke is here.

Samuel, the big question, who are you wearing?

SAMUEL BURKE, CNN TECH BUSINESS CORRESPONDENT: Well, it's retail. So very, very cheap on your money.

But, you know, it used to be Hollywood that got all the money and attention in California, and now, it's a different city. Silicon Valley getting the spotlight.

(BEGIN VIDEOTAPE)

BURKE: It's time for the glitz, the glamour, the red carpet. We take out our tuxes and salute the stars of the small screen in our very own tech version of the Oscars.

(voice-over): Our Oscar for best cinematography goes to the micro video popularized by Twitter own, Vine. Who needs a three-hour marathon like "The Wolf of Wall Street", sometimes a short Vine micro- movie says it perfectly. And instead of wolves on Wall Street, on Vine, you also get way cuter animals.

Best animation, Candy Crush. No Flappy Bird flame-out here. Parent company King is staying in the game and filing for what could be one of 2014's most closely watched social media IPOs.

But this crush could be fleeting without a sweet sequel. The lifetime achievement award for industry best goes to Mark Zuckerberg.

MARK ZUCKEBERG, FACEBOOK: Just last week, we had a pretty cool milestone in Facebook.

BURKE: Sure, he's under 30 but Facebook just hit 10. That's senior citizen status in the social media world. Aging Facebook is looking for new blood like WhatsApp to stay on top.

Best ongoing drama, Blackberry, clinging to life but for how long? Once BlackBerry was a pioneer in mobile instant messaging, then came WhatsApp, Viber, Instagram, Snapchat, even Alicia Keys jumped ship as if she were on fire. Still, shares are up about 38 percent this year. Can BlackBerry finally find a buyer?

(on camera): And now for our big awards.

(voice-over): Best actor, Jeff Bezos. He wowed them on "60 Minutes" promising the golden age of the Amazon drone delivery to doorsteps. But sorry, customers, no drones for you. Not for years yet. We'll see if Bezos can back up his bravura performance with real airborne action.

Best actress, Yahoo! CEO Marissa Mayer, saleswoman extraordinaire. She is keeping a brave face as ad revenue withers away. Despite headline-grabbing hires and flashy new video channels, critics say this Silicon Valley honeymoon is way over.

(on camera): And now, our award for best picture, "Gravity" or in this case, defying gravity.

(voice-over): Tech stocks are hitting 14 year highs. Mobile deals are eye-popping. And valuations are soaring higher than Clooney and Bullock.

Will the tech party come down to Earth or will the Wall Street buyers club continue?

(END VIDEOTAPE)

ROMANS: Samuel, very clever. I've got my money on Sandra Bullock for "Gravity" for best actress. I've got one more for you, the award for the best horror film. The envelope, please.

We have hack attack. Want to talk scary? Who was the bigger spy, your e-mail provider or the NSA? Hackers trying to steal your identity, even getting into baby monitors to peer into your child's home, TVs that watch you back, avert your eyes if you want but your digital life is playing out in front of a huge audience.

We give best horror film to the hack attack.

BURKE: Best dressed? Christine Romans.

ROMANS: Flattery will get you everywhere in the show.

Samuel Burke, nice to see you. Very clever piece. Thank you.

BURKE: Thanks.

ROMANS: All right. Thank you for starting your Saturday smart. Coming up on a brand new YOUR MONEY at 2:00 p.m. Eastern, bulls, bears and black swans -- the three key wards in investing today. Why these creatures matter to your money. That's coming up at 2:00 p.m. eastern.

But, first, "CNN NEWSROOM" starts right now.