I watched Gary Stevenson debate a real economist. Here’s why he’s wrong
All Stevenson’s arguments in favour of a wealth tax are based on personal anecdote. When you look at the actual evidence his case falls apart, says Oliver Dean
Last week, I had the opportunity to host a debate between famed YouTuber and activist Gary Stevenson, and Dr Kristian Niemietz of the Institute of Economic Affairs. The debate centered around whether the ‘super rich’ were destroying the UK and whether a wealth tax could solve Britain’s economic woes. Yet, what became clear to me after listening to Stevenson debate a real economist was that his ideas for a wealth tax are nothing short of a fantasy – and Britons would do well to steer clear of his beliefs.
Speaking with immeasurable levels of confidence, the ex-banker made the claim that economists suffer from an, “inability to think without data”. The reaction from the audience was varied. Some laughed, some sat in silence, aghast at what they had just heard and (for the economically-illiterate in the room) some even clapped.
This raises a very obvious question. If we are not to use data and numbers to make economic arguments, what, then, would Stevenson want us to use instead? Whilst he was quick to establish that he would not want economists to act on “vibes” alone, his heavy-handed statement opened the door to a question that necessitated an answer. And, unsurprisingly, he was unable to provide one. What is undeniable, therefore, is that Gary Stevenson and his economic ideas are nothing short of a fantasy. When put under any level of scrutiny, they collapse.
This refusal to rely on numbers would be worrying in any context, but it becomes indefensible once you examine the wider evidence. When one goes beyond Stevenson’s anecdotes, and examines the record of wealth taxes internationally, his argument falls apart. One such example of this is the Spanish Net Wealth Tax, which was reintroduced in 2011. After just two years, the academic research was clear that when the tax was reintroduced, taxpayers responded by, “adopting avoidance strategies which consist of moving assets from taxable to non-taxable wealth”.
This aligns with similar experiences in France. France’s wealth tax, the Impôt de solidarité sur la fortune, “contributed to the exodus of an estimated 42,000 millionaires between 2000 and 2012” which was rumoured to have cost the French Treasury billions. Indeed, the tax raised so little revenue and led to such a massive loss in finances that Macron abolished it in 2018 in an effort to incentivise wealth creators to return to France.
Considering the current exodus of talent that the UK is already experiencing, implementing a wealth tax that would force even more innovators and wealth creators out of the country would be entirely foolish. Yet, that is exactly what quasi-economists like Gary Stevenson want.
With regards to UK specific arguments, the OECD argues that wealth taxes come with a host of “practical difficulties” and result in “limited revenues” actually being raised, as individuals will simply shift their wealth overseas. Similarly, the IFS has lambasted the idea, arguing that it is, “difficult to make the case” for an, “annual tax on wealth” as it would, “penalise saving and investment”.
Every advanced economy that introduced a wealth tax eventually scrapped it because it did not work
True, one could trawl through hundreds of reports that discuss the merits of a wealth tax, but the overwhelming conclusion is clear. Every advanced economy that introduced a wealth tax eventually scrapped it because it did not work.
It likely surprises no one that when an activist who has built his career on personal stories and half-truths faces off against an economist who knows his figures, the economist wins. Yet despite such fanciful economic ideas, influential people are listening – and they like what they hear. Prominent figures such as Zack Polanski have boasted of the impact that Stevenson has had on their thinking, and this influence is only growing.
But what people must keep in mind is that data trumps personal stories every time. Stevenson’s continued advocacy for a wealth tax does not align with the evidence available both here in the UK, and in places where wealth taxes have been tried abroad. We must reject the economic-illiteracy of quasi-economists such as Stevenson, or risk wreaking havoc upon the UK economy.
Oliver Dean is a political commentator with Young Voices UK. He studies History and Politics at the London School of Economics and Political Science (LSE) where he is the President of the LSE Hayek Society.