During an appearance on CNBC’s Squawk Box on Tuesday, businessman Sam Zell — whose net worth is nearly $4 billion — claimed that government benefits are “disincentivizing” struggling Americans from wanting to succeed. After questions by CNBC’s Andrew Ross Sorkin, Zell blamed increasing income inequality and America’s lack of economic mobility on health care reform, tax credits for low-income workers, and unemployment benefits:
ZELL:The reality is as follows: the whole focus has been on how the, quote, one percenters, the 10 percenters, whatever these top earners have moved ahead of everybody. I wonder if there’s any correlation between while they were moving ahead, the rest of the government was subsidizing, subsidizing more and more people and disincentivizing them. Why is it always assumed that somebody doesn’t succeed because he can’t, as opposed to he doesn’t want to, or isn’t incentivized to. [...]
SORKIN: There’s no suggestion, at least that I’ve heard, that the reason why people have had a harder time rising through the ranks today is a function of the fact that they’re disincentivized to rise through the ranks.
ZELL: Wait a minute. I think that they are disincentivized by, in effect, if you don’t have to pay for your health care, that’s another thing you don’t have to worry about…For every step contributing to the progress at the top, there’s an additional step on the bottom to increase the earned income [tax credit], to extend unemployment insurance for 28 years.
Both Zell and CNBC co-host Joe Kernen claimed that Europe proves their point of view, saying that the European populace has “learned helplessness” due to government, rather than learning to succeed. However, economic mobility is actually higher in many European countries(with large social safety nets) than it is here in the U.S., where “65 percent of Americans born in the bottom fifth stay in the bottom two-fifths as adults, while 62 percent of those born in the top fifth of incomes stay in the top two-fifths.” It is growing income inequality, spurred by policies that benefit those at the very top of the income scale, that is killing economic mobility.
Meanwhile, as ThinkProgress reported, the lion’s share of tax breaks actually go to the richest Americans, not to those in the middle or bottom of the income scale. The bottom 60 percent of earners only garner 20 percent of the total tax breaks. Zell’s Tribune Company benefited from some of these breaks, saving $1.8 billion by filing taxes as an “S corporation,” rather than paying the full corporate income tax rate.