Gary Stevenson - Multi Millionaire, Income Growth and Income Inequality

  

Gary Stevenson became a multimillionaire by "betting inequality was going to destroy our economy and make the poorest in society even poorer".

Growing up with his brother and sister in a cramped two-bed terrace in Ilford, east London, Stevenson, 35, had always wanted to make a lot of money. "I was a clever, poor, ambitious kid, who just didn't want to be poor any more."

He achieved his goal by the age of 22, getting a job as a trader at Citigroup in Canary Wharf in 2008. Within two years he had made his first million. His pay and bonuses continued rising as his bets - that interest rates wouldn't rise and the equality gap would widen - made tens of millions for the bank.

Mammon
Elinor Proby Adams (1885-1945)
Photo Credit: UCL Culture [CC BY-NC-SA]

Then he quit. "I was making more money than I could ever imagine," Stevenson says from his flat in Limehouse, overlooking the Citi tower he once worked in. "But it wasn't right."

... However, Stevenson didn't just walk away from his old job. He is now working to fight the system he previously worked in, campaigning to raise awareness about what bankers like him are doing in the gleaming towers of Canary Wharf and the City of London to "continue to make the economy unfair."

... Stevenson, who campaigns for a wealth tax as part of the Patriotic Millionaires movement, describes inequality as "a cancer in our economy" that is "untreated and it's growing." ... "The policy which I campaign for mainly is a wealth tax because I think it's the most realisable ... Tax is the most important thing. It's the only way that poorer people can have a chance of catching up. - I'm not talking about huge taxes on high earners like doctors or lawyers; I'm talking about going after the families who have been keeping their money for ever. These families have hundreds of millions of pounds, and money makes money so it's just going up and up. I was paying 45% tax on my earnings, but the Duke of Westminster was paying next to nothing on his billions of inheritance."

When the sixth Duke of Westminster died in in 2016, his heirs paid no inheritance tax on the bulk of his £8.3bn family fortune...

(Rupert Neate, The Observer, 2022)

... UK household income growth between 2007 and 2018 fell behind the rest of Europe, with only Greece and Cyprus below us. Ireland grew by 6%, France by 10%, Germany 19%, while the UK fell back - yes backwards - by 2%. All countries struggle in this energy shock, but after 15 years of income stagnation, "global Britain" is the hardest hit and least resilient.

"A toxic combination of both low growth and persistently high income inequality" is this audit's [Resolution Foundation] definition of the British disease. Among EU countries, only Bulgaria is more unequal than us.

... UK jobseeker's allowance [is] at its lowest on record, just 13% of average pay. Sweden covers 80% of previous pay for those seeking a new job. In this fragile society, more than a quarter of households say they couldn't manage a month on their meagre savings.

... Whenever technical "recession" arrives, yesterday's [July 2022] audit shows that living standards have already been in a 15-year recession. The half of households below median income levels rely 70% on pay and 30% on benefit top-ups - so both are responsible for Britain's slump in living standards. Pay needs to keep rising - but benefits also need the same triple lock as pensions.

... Of course we should tax more, and more fairly: look at the shabby long-term social consequences of paying lower tax than France and Germany. We should tax the rich until their pips squeak, when they have gained so much recently while the rest lost out. But in the end all that can sustain us is rising productivity.

However, business is on strike over investment. Already abysmal, preferring dividends and share buybacks, business investment has fallen to 9.2% below pre-Covid levels. The profits of the largest non-financial companies rose by 34% in 2021, compared with pre-pandemic levels, says the Institute for Public Policy Research thinktank; time to reign in profiteering...

(Polly Toynbee, The Guardian, 2022) 

What are the top personal rates of tax (in %) in other countries and what is the average monthly wage - net (after tax) in euros?

Denmark                       55.9%                            3,900

France                           55.4                               2,791

Austria                          55                                  3,104

Spain                            54                                  2,039

Greece                          54                                  1,116

Belgium                       53.5                               2,442

Portugal                       53                                  1,162

Sweden                        52.3                               2,769

Finland                        51.2                               2,509

Slovenia                      50                                  1,306

Netherlands                49.5                               2,240

Ireland                        48                                  3,042

Germany                    47.5                               2,970

Italy                           47.2                               1,752

Iceland                       46.2                               3,221

Luxembourg              45.8                               3,573

UK                             45                                 2,451

Switzerland               44.8                              5,414

Turkey                       40.8                             291

Norway                     39.4                             3,792

Poland                      36                                1,019

Lithuania                 32                                 1,087

Latvia                      31                                 1,011

Slovakia                  25                                 920

Czech Republic      23                                 1,245

Estonia                   20                                 1,214

Hungary                15                                  892

(Personal rates of tax come figures from the Tax Foundation and the average net salaries, 2000 - 2018 come from Wikipedia)

So of the 27 European countries listed 16 have a higher 'top personal rate of tax' and 11 have a higher average monthly wage than the UK. Nine countries -  Denmark, France, Germany, Austria, Sweden, Finland, Iceland, Ireland and Luxembourg - have higher 'top personal rates of tax' and their monthly average wages are higher than those in the UK.  

The UK's failure to get serious about inequality and weak growth over the past 15 years has left the average British household £8,800 poorer than its equivalent in five comparable countries, research has found.

A "toxic combination" of poor productivity and a failure to narrow the divide between rich and poor had resulted in a widening prosperity gap with France, Germany, Australia, Canada and the Netherlands, the report from the Resolution Foundation said... The UK had closed the productivity gap with France and Germany in the 1990s and the first half of the 2000s, but since then the gap had widened from 6% to 16% - the equivalent of £3,700 per person.

While the top 10% of households in Britain were richer than those in many other European countries, middle income British households were 9% poorer than their counterparts in France, while the poorest fifth of households in Britain were more than 20% poorer than their French and German equivalents.

(Larry Elliott, The Guardian, 2022)

Sir, Your headline "Households getting poorer as Britain falls behind rivals" regarding an analysis by the Resolution Foundation and the LSE prompts the question; why? The report contains the answer: the top 10 per cent of UK households are richer, not poorer, than the elites of many wealthy countries. Levelling up depends on controlling greed and unethical behaviour by our elites. High tax/low tax is just a distraction.

(Jamie Camplin, London SW19, The Times, 2022)

Workers in the UK are heading for the worst "real wage squeeze" among leading economic nations, according to a report.

The TUC said its research suggested that real wages in the UK were forecast to shrink by 6.2 per cent over the next two years, the highest figure of any G7 economy.

Pay growth would bounce back faster in other countries, leaving the British workers suffering the longest and harshest pay squeeze in modern history, the union  organisation said. Years of wage stagnation had left families "brutally exposed" to Britain's cost of living crisis, the report said...

(The Times, 2022)