Gary Stevenson—a man who claims he used to be the best trader in the UK—is starting to gain popularity as a man who comes from a working-class background, has moved in the circles of the elites and knows how the economy really works. He has appeared on many establishment outlets like Channel 4 and BBC Question Time to argue that wealth inequality is the real driver behind falling living standards and increasing stagnation. To fix this, Stevenson argues, there must be an introduction of a wealth tax. Unfortunately, his whole argument seems to fall apart under the proper scrutiny, which Britain’s political elites are unable to give as they too are captured by a lack of understanding of economics.

Stevenson begins his analysis by correctly identifying that the response by the government to the 2008 financial crisis and the covid pandemic resulted in huge wealth transfers to the richest in society. He states that interest rates being lowered to almost zero caused the wealthiest to borrow money to buy up all the assets in society and take wealth from the poorest. This results in a society where—even if the government hands out checks to ordinary people, as we saw during covid—they are still going to see their wealth disappear as the wealthiest have bought the assets, like housing, meaning they receive the money—originally sent to the poor—through payments like rent. A wealth tax, he claims, will address this inequality.

He claimed on BBC Question Time—when challenged on whether a wealth tax would work—that the UK implemented it successfully during the 50s, 60s and 70s. Even though there certainly was no wealth tax during that period, Stevenson can be given the benefit of the doubt since he may have meant that there effectively was a wealth tax as marginal tax rates were extremely high—in the 80 percent to 90 percent range.

It is true that during this period there was rising equality in incomes and wealth, but if Stevenson were right that the taxation caused it, you would expect that the share of total tax receipts paid by the top one percent would have been astronomical. The data tell us the opposite, suggesting that the top one percent of earners found ways to legally avoid the extreme levels of taxation; thus, it’s certainly not black and white that the high tax rates caused the rising equality seen during that time period. If Stevenson’s thesis is correct that the high tax rates caused a redistribution of wealth, the expectation is that the share of tax receipts from the highest earners would be very high, but that was not the case. Therefore, Stevenson cannot claim that a wealth tax would work to bring about economic equality. …

Focusing on the perceived wretchedness of inequality—in wealth or income—creates a distorted worldview that leads people, like Stevenson, to solutions that will neither solve the problem nor are they moral. It is not inherently an immoral circumstance for some to have a lot more than others. The immorality stems from the vast disparity being achieved through political means.

Stevenson correctly identifies that the central banks lowered interest rates—sometimes talking about the great expansions in quantitative easing too. This caused the ultra-wealthy to acquire access to cheap credit before the money could work its way through the system and devalue money more widely causing the assets that the wealthy bought to become very profitable purchases. However, Stevenson does not consider disposing of central banking or fractional reserve banking.. …

Fleshing out the moral and economic arguments against a wealth tax from a libertarian perspective would further display the rotten nature of Stevenson’s ideas. Even giving the benefit of the doubt and the best-case scenario does not save the idea of a wealth tax. A wealth tax is just another extension of statism which is destroying British society. It will further serve to expand the state and distort the economic calculation. It will not address wealth inequality; it will not stop the central bank spigots from causing the inequality.

The politicians will be the lonesome winners of a wealth tax. Watch as they parade through the airwaves, talking a big game about how they took on the immensely unpopular ultra-wealthy elites while those same elites continue to line their pockets. Britain needs to take away the political means by which the rich manipulate the market to their advantage while holding back their less-well-off competitors. This will address the politically-imposed inequality rather than more interventionism.