Surely Gary Stevenson is smart enough to know a wealth tax won’t work?
Britain’s self-styled greatest inequality economist, Gary Stevenson has proposed a two per cent annual levy above £10m to level the playing field. Surely he knows that won’t work, writes Damian Pudner
Gary Stevenson tells us he is “one of the best, if not the best, inequality economists in the world”. The argument, apparently, runs as follows. Britain had Tony Atkinson, but he is dead. Piketty and Zucman are in Paris. “So now it’s just me in this country.” One admires the confidence. Sadly, confidence is not enough to pass the smell test in the wealth tax debate.
Stevenson’s diagnosis is half right, but only half. Britain has seen an extraordinary transfer of wealth towards asset owners since 2009, and anyone who traded rates through that period knows where it came from. Stevenson did, profitably. The answer is the Bank of England.
Quantitative easing worked by driving up bond prices, crushing yields and pushing investors out the risk curve. It was always about inflating asset prices. £875bn of gilt purchases handed enormous windfalls to anyone who already owned property or equities, while wage earners and cash savers quietly picked up the bill. Layer on a planning regime that has rationed housing for decades and you have your inequality machine, built in Threadneedle Street and left running ever since.
Having made his fortune betting against the post-crisis recovery, Gary now wants to fix the resulting inequality with a two per cent annual levy above £10m. He has spotted the leak in the roof and proposes to tax the puddle.
The problem with wealth taxes
Here the world’s best inequality economist runs into the awkward business of evidence. France ran a broad wealth tax, in its modern ISF form, from 1988 until 2018, when it was replaced by a narrower property-only levy. Eric Pichet’s study of the ISF estimated that it triggered roughly €200bn of capital flight and cost the French state about €7bn a year in lost revenue, twice what the tax actually raised.
Norway increased its wealth tax at the top end in 2022. On Civita’s figures, 261 residents worth more than NOK10m left that year and another 254 the next, more than double the pre-hike rate. Kjell Inge Røkke, one of the country’s richest men, was among them, though not every departure can be pinned on the tax alone. Around 40 per cent of the leavers were business owners, and Christine Blandhol’s Princeton research puts the long-run output loss at about 1.3 per cent. Oslo’s response? A tougher exit tax. When a wealth tax needs an exit levy bolted on just to stop people leaving, the policy has already answered its own question.
Stevenson’s response to all this is that the exit threats are “just scaremongering”. In the very interview where he makes that claim, Sunday Times Rich List figures show that 111 of Britain’s 350 richest people already live off the British mainland, and one in six names from the list two years ago has gone completely. And that’s all before a wealth tax. Wealth does not wait for the announcement. It reads the room. And the room since 2024 reads: non-dom abolition, VAT on school fees, a mansion tax. Stevenson made his career reading market signals, which is what makes the routine so tiresome.
What he never does, though, is run the numbers. The Tax Justice UK proposal he echoes claims £24bn a year from roughly 20,000 people, assuming most of them stay put and can be valued accurately. Dan Neidle’s analysis of that same proposal found 80 per cent of the projected yield comes from about 5,000 individuals, and 15 per cent from just 10. A handful of Milan relocations removes billions before HMRC has valued a single private company. Even the proposal’s own low-response scenario implies £200bn of capital leaving the country.
Now put that £24bn in context. Britain borrowed £129bn last year. The state is spending close to 45 per cent of national income, and debt interest alone is running at about £110bn, around 1.8 times the £62.2bn defence budget. 10 weeks of the deficit. Less than a quarter of the interest bill. That is Stevenson’s flagship policy at his own valuation, and gilt investors will not be reassured by a government that responds to a structural deficit by auctioning off its own private sector.
Hypocritical millionaires
Then there’s the giveaway. Asked whether, as a millionaire campaigning for millionaires to pay more, he gives any money away, Stevenson replies: “I don’t, no.” He has, by his own account, made more money betting since leaving banking than he made inside it. But the country’s loudest advocate of wealth taxation responds to his own wealth exactly as his critics predict others will: he keeps it. And he sees no hypocrisy in it whatsoever.
That hypocrisy is why Britain needs the conversation Stevenson is too invested to have. Since 2008, productivity has hardly grown. Industrial electricity prices are the highest in the developed world. Housing, land and infrastructure are rationed through a planning system designed in 1947, and we then express bafflement that assets are dear and the young are poor. Restore sound money, liberalise supply and the wealth-to-income ratio corrects itself the way it did when a working family could actually buy the house on their street.
Stevenson says he doesn’t want the country “to go down the toilet”. Nor do I. But he watched central banks manufacture this inequality from a trading desk, and he knows a two per cent levy won’t reverse it. The honest version of his argument leads to monetary reform and a supply-side revolution. But that version doesn’t get millions of views on Youtube. Wealth taxes do.
Damian Pudner is an economist and senior research fellow at the Great British Think Tank