The Economy Is Rigged for Billionaires — ft. Gary Stevenson

Gary Stevenson, former trader turned economist and inequality activist, joins Scott to discuss why wealth inequality is accelerating across the West. They unpack the rise of the billionaire class, why the middle class is shrinking, and whether wealth taxes, estate taxes, and stricter tax enforcement could reverse the trend. Gary argues that modern economies increasingly reward ownership over work — and warns that younger generations are on track to become poorer than their parents. Also, friendly reminder that we're live on Substack. Subscribe at profgmedia.com to get ad-free versions of all our podcasts, the full archive of Scott’s newsletters, and exclusive content including deep dives, livestream conversations, and subscriber Q&As. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 1:33Scott Galloway?

  Episode 395. 395 is the area code belonging to Jalisco, Mexico. In 1995, the PlayStation launched globally. I had a Mexican girlfriend, and I should have known she had a drinking problem. I asked her what her favorite book was. She said, "Tequila Mockingbird." Probably a hate crime. Go, go, go!

• 2:05Scott Galloway?

  Welcome to the 395th episode of the Prop G Pod. What's happening in today's episode, we speak with Gary Stevenson, a former trader turned economist and activist behind Gary's Economics. I genuinely believe the biggest problem facing America and the West right now is income inequality. And that is, if you look at the Gini coefficient, which is essentially a measure of variance or inequality, I think it's an Italian mathematician named Gini. Anyways, zero is everyone has exactly the same, you know, communism. One is, one person has everything, you know, Musk is getting close.

• 2:48Scott Galloway?

  Anyways, where we are now is, the US is at 0.85. When France was at 0.83, they started separating people from their heads. And so, income inequality, the resentment, I think is tearing us apart. It results in class warfare. It results in an inability to invest in the middle class. Essentially, the cycle is over and over again, and that is a small group of very talented, hardworking, and lucky people. Weaponized government can come up with incremental reasons why they should have subsidies, better tax loopholes, and they essentially run away with it. And we have a society that collapsed. This is essentially the story of Central America and more broadly, history throughout time. And I think it's happening in America and the West.

• 3:33Scott Galloway?

  Anyways, I found Gary because he talks a lot about income inequality. He speaks to it very eloquently and very forcefully. And I'm a big fan of his work, and I think you'll enjoy the episode. So with that, we hope you enjoy our conversation with Gary Stevenson.

• 3:57Scott Galloway?

  Gary, where does this podcast find you?

• 3:59Speaker 05

  I'm in my flat in London, East London, close to Canary Wharf.

• 4:04Scott Galloway?

  Let's buzz right into it. You were on Prop G Markets about a year ago. And at that time, the wealth tax conversation has picked up significantly in the US. The top 1% of households now hold a staggering 32% of all wealth. The greatest share since the Fed began tracking in 89, roughly equal to the combined wealth of the bottom 90%. I should also add the top 10% own 90% of the stocks. And at the same time, the portion of GDP going to workers just hit its lowest level in 75 years. So this has given rise to a bunch of different proposals. One of which has gotten the most attention is in California. They're actively debating a one-time 5% tax on residents, essentially a wealth tax,

• 4:47Scott Galloway?

  with a net worth exceeding $1 billion. Let's start more broadly, and then we'll talk about the wealth tax. Do you feel like we're in an inflection point around a serious conversation around inequality? When I say serious, it will actually lead to different tax policies?

• 5:03Speaker 05

  I think there's obviously been an increase in the salience of discussions around, in particular, taxation of the rich. If I'm totally honest, I think still, when these conversations take place, as much as obviously from my perspective, it's great that they're taking place more often. I think they are still often a little bit facile in the sense that they... And I think that is because, especially in the US context, they're happening in this context of this incredibly factional political debate, where it's very much my side, your side. And it's very frustrating for me because my background, as you know, is I'm an economist, I'm a trader.

• 5:46Speaker 05

  And what I see is rapidly growing inequality of wealth, which I think is increasingly, obviously, pretty directly causing rapidly increasing poverty, rapidly falling living standards. And what I would like there to be is like a grown-up sensible conversation where we say, "Okay, how do we stop this?" But in reality, that's not really what is happening. What tends to happen is people like... Well, to be honest, it's often not people like me. It's just sort of become two sides. It's like tax the rich and no, don't tax the rich because it's impossible. And the conversation has it has become factional in this way. That it has not really created the space, which I would say really allows anybody, even me,

• 6:30Speaker 05

  to have a really sensible conversation about how can we actually do this in a way that actually works? And I think that's true on both sides, really. I don't I don't think anybody and you know, I I work quite hard out here to try to find the people who are really doing the work on how can we do this sensibly? And if I'll be totally honest, those people are not getting funded really by either the people who are actually working on how do we really design this are not really getting funded. And it feels a little bit like it's being sucked into the sort of whirlpool that is politics. Um, but if I'm totally honest, that is a significant improvement on where we were one year ago, two years ago, because at that point in time, really,

• 7:13Speaker 05

  nobody was really talking seriously about reducing inequality at all. So have we moved into a better place? Yes. Are we on the verge of fixing this problem? I I I don't think we're quite there yet.

• 7:24Scott Galloway?

  What is your view on wealth taxes? The the and this is a question that is loaded with a comment. Most of the research I've done on wealth taxes shows that, to be blunt, they don't work. That sixteen or thirteen of the sixteen countries that have tried to impose them, I get them theoretically and it makes sense to me. But I think governments, especially I would argue the UK government, struggles with the difference between being right and being effective. And that wealth taxes are potentially right, but that our no just picks up and moves to Brussels, that the wealthiest among us are the most mobile and can avoid wealth taxes. And I think there's also a decent argument that once someone has cleared the initial hurdles of taxation, it is private property.

• 8:07Scott Galloway?

  So I would argue they're not effective. I'm curious to hear your viewpoint on wealth taxes.

• 8:14Speaker 05

  If they are designed well, then they are effective. If they are designed badly, then they are ineffective. I don't think it's really any more complicated than that. I think inheritance tax is a form of a wealth tax. I think it worked relatively effectively to stop very high level wealth accumulation in in the US, in the UK, in at least the sort of thirty, forty years immediately following World War Two. Once you see these inheritance tax effectively removed, inheritance tax is already effectively removed, especially for the very rich in the US and the UK, that's when you start to see this wealth transfer start. So, you know, we had a form of a wealth tax and that limited inequality and we removed that wealth tax and inequality started to increase.

• 8:55Speaker 05

  If you want to find examples of wealth taxes designed and implemented badly, you will find them. And if you want to find examples of planes that were designed and implemented badly, you will find them. And if you want to find examples of spaceships that were designed and implemented badly, you will find them. The result of designing a plane badly, the correct response to that is not to stop trying to design a good plane, it is to design a good plane. It's as simple as that, but listen, because exactly as I've just said, the debate is in a facile place and the debate should take place on, okay, we have an urgent crisis of growing inequality. Badly designed wealth taxes are not going to work. Let's really get some sensible and smart people together and design a wealth tax. And listen,

• 9:39Speaker 05

  I've been lobbying the government out here, as you probably aware, the Labour government and before that the Conservative government for a long time. And what I say to them is, put a little bit of money into a team of good economists and let me have access to them. Let me speak to them. It's not going to take much because I cannot describe to you how horrendously underfunded this area is. Really, if the UK government or even the US government was to fund six good economists and good practical economists and say make the US the world leader on wealth taxation that is unavoidable to the super rich, then the US would become the world leader in that. Because it's so underfunded. So really, like, of course, you're gonna get badly designed wealth tax.

• 10:24Speaker 05

  I'll tell you exactly why, because we urgently need a wealth tax. And people like me are massively ringing the bell on that. But we do not have the funding to design the wealth tax. So what you will get is, to be honest, quite childish political parties saying, we're gonna give you a wealth tax without giving us the funding we need to design the wealth tax. And then what they're gonna do at the same time is they're gonna try to keep their funders happy and they're gonna try to keep their donors happy, which means they're gonna put loopholes in the wealth tax. And that's what's gonna happen. But the response to that is not to give up fixing the problem. The response to that is to fund a good team to design the tax well. And I wish, you know, and I guess we're having it now. I wish there was space in the media to have this conversation of, look, these taxes are hard to design,

• 11:08Speaker 05

  but they're important, so let's do the work and design them well. But it's become this stupid debate of, oh, this essential thing, which if we don't do, society's gonna collapse, is quite difficult and has been done badly, let's give up. And I think that is an absurd stance to take, if I'm honest.

• 11:23Scott Galloway?

  I think people do just distinguish an estate tax from a wealth tax. And I want to acknowledge, and I've been talking about this for a long time. The idea of dynastic wealth is not healthy for anybody, I don't think. I think it's one of the, actually, one of the really wonderful attributes of America versus Europe is we traditionally do not believe in dynastic wealth. And the difference in happiness, what do we want? We want taxes that are at least taxing. And if the basis airs inherent a hundred billion versus a hundred and sixty billion, no one's happiness is affected, but that sixty billion dollars is inefficient, as you might argue government is, can create a lot of incremental happiness in terms of childcare or better funding the NHS. You know, pick your, pick your social program.

• 12:08Scott Galloway?

  I don't think of that as a wealth tax, but I get your argument that it kind of is a wealth tax. So let's, it sounds, it sounds like there's common ground around. I think the easiest means of increasing revenues would be, there's gonna be, I think, seventy-five trillion dollars in wealth passed on to the next generation over the next just twenty years to lower the exemption from thirty million to one million. Because it doesn't hurt anybody, as far as I can see, in terms of happiness, and would actually create a great deal of tax revenue.

• 12:40Scott Galloway?

  I'm pretty sure you'll agree with that. The notion, though, that they're talking about in California, an actual wealth tax, where they'd attempt to value your asset base and then tax a certain amount of it. Do you think that is, do you think that can, if designed correctly, could actually be an effective tax? Or do you believe that wealth taxes, as I've described them, are not effective?

• 13:02Speaker 05

  I think if designed correctly, it can work. I think you obviously, obviously, if you're talking about annual taxation on wealth, if you start that at a low threshold, there is an administrative burden. So I would probably say your ideal solution is a combination of, as you say, estate taxes on high amounts and wealth taxes. But if you're gonna talk about wealth taxes, you probably do wanna start at a relatively high threshold because of the administrative burden. But also, let's be realistic. The income tax system has an incredibly high administrative burden. You know, I think if we were in a situation now where we didn't have an income tax, and we have that conversation now about income taxes, it would be widely claimed by the press that income taxes are impossible because of the administrative burden.

• 13:45Speaker 05

  You know, this is, this is possible, you know, of course it is possible.

• 13:50Speaker 05

  But I think unfortunately, this thing kind of happens where I think there is a lot of bad faith argument from rich people who do not wanna pay more taxes, that what they wanna do is split hairs on the exact design of the taxation to try to avoid being taxed at all. The reality of the situation is, we live in a country, the UK, you know, the Americans who we're listing also live in a country where very rich people, once you're talking about people who have wealth of above ten, twenty, thirty, forty, fifty million pounds or dollars, pay significantly, significantly lower rates of tax on overall lifetime income than poorer people. And they are rapidly accumulating wealth at an enormous rate, far faster than the rates of growth of economies,

• 14:33Speaker 05

  at the same time as other groups of society, most obviously governments, but also including the working class and the middle class, are rapidly losing their wealth. So something needs to be done. I think world taxes could work if they were designed correctly. I think capital flight is a legitimate risk. I think it can be managed and minimized if the tax is designed correctly. I think inheritance tax on large estates should obviously be part of the game here, but they've been massively demonized by the press. Um, I understand why they've been demonized because what you've created now is an economy. We live in economies now where if you are not giving a significant inheritance to your kids, am I allowed to swear? I don't know what the situation swearing on this is.

• 15:11Scott Galloway?

  Hundred percent. We encourage it.

• 15:13Speaker 05

  The, the, the economies that we live in, the UK and the US, if you are not giving a significant inheritance to your kids, if your kids aren't getting realistically something close to a million dollars, your kids are in trouble. And if your kids are getting close to nothing, they are basically fucked. That is the economy that we've created. So what we have created, to be honest, is an inheritocracy. It is not capitalism in any way. Outcomes for individuals, especially for younger generations, are incredibly related to the amount of inheritance they get from their parents. So we've created, and that is because, that is entirely because we tax work income and we do not tax hoarded wealth. Right? But then obviously people have become very defensive because they're like, don't touch my inheritance, don't touch my inheritance. But the truth is, if you do not touch the hoarded wealth of the very rich, then everybody else is going to get squeezed out.

• 15:58Speaker 05

  But the very rich do this very, very clever thing where when I say tax them, they do this bait and switch, which is all what Gary really wants is to tax you.

• 16:07Scott Galloway?

  I would love for, for you to kind of walk us through what, what non-dom. And the impression of, I think, people in the press and Americans, myself included, is that the, again, this is another example of being ripe but effective, and you may disagree. I would, I would love for you to explain what the non-dom taxation change in policy was in the last year. The general impression I have, and I'm open to feedback or correction here. Is it, while theoretically it made sense, the number of wealthy people who have actually left London in order to avoid this tax is actually going to reduce receipts to the Treasury. This is a perfect example of something that was populous red meat,

• 16:51Scott Galloway?

  but actually isn't achieving the objective of raising revenues. So, one, can you describe, tell us actually what non-DOM policies were, what the, and what happened?

• 17:03Speaker 05

  Yeah, you know what? This is actually a really good story for describing how to do this badly, right? So the non-DOM principle is like a really old principle of British taxation that dates back to like colonial times, which was basically you've got all these like foreign colonial Brits that are making tons of money overseas and they're not paying their tax in the UK because they live overseas. And basically, the UK says, well, you guys can come back and you know, you can live in London, presumably wherever you want to live, and we're not going to tax you on your overseas income, all of your overseas earnings. And this is to basically encourage, historically, you know, these foreign, very, obviously Britain was this massive colonial empire, these foreign Brits to come back and spend time in the UK and spend their money in the UK.

• 17:48Speaker 05

  And it's been unpopular, obviously, because, well, obviously that's historically. Nowadays, it's not used by colonial Brits. Obviously, the empire is long gone. Now, this is used by, you know, stereotypically Russian billionaires, but you know, a variety of foreign billionaires. It allowed them to live in London and enjoy the benefits of living in London and have these enormous incomes and basically pay very little British tax because that is on overseas income, billionaires' assets that they own overseas. And this is a good example of exactly the wrong kind of people you should go after from a practical perspective, because these are people who have very weak ties to the UK and can leave, right? Because when we talk about billionaires, right?

• 18:33Speaker 05

  There's British billionaires that own British assets. There's British billionaires that own foreign assets. There's foreign billionaires that own British assets. And there's foreign billionaires that own foreign assets, right? And it's, you can obviously take that to the US. And the group of billionaires that you have the weakest power to tax is pretty obviously foreign billionaires who own foreign assets, right? These people is, just to be clear, you're not totally powerless on taxing these people. The best example, especially for a country like the US, is tariffs. You know, tariffs is to some degree, an attempt by the US government to tax foreign billionaires with foreign assets. Because you're taxing them on their things that they sold to the US. But especially as a small country like the UK, this is a group of people who you are relatively weak to tax and they can leave.

• 19:19Speaker 05

  What you should be trying to tax, in my opinion, is people who own your domestic assets. Because then they can leave, and if they're owning assets in your country, they're still generating income from your country and you still have power to tax it. So I think, but this is, it's a good example of what I'm saying, where the media salience has come through on, okay, inequality is a problem, you know, and I would like to claim, you know, partial credit for that. But we haven't really cleared, because it's become so factional and the whole thing has become, you know, is Gary an idiot or is Zach Polanski an idiot or is Zohar Mamdani an idiot? We haven't really created a space where both sides acknowledge the truth, which is basically the left acknowledges taxing the rich is hard and work needs to be done on designing these taxes correctly.

• 20:04Speaker 05

  And the right acknowledges if we don't do anything on it, then living standards will continue to fall and poverty will continue to grow. And we build some sort of like cross-left-right consensus on doing this. And the conversation is not really happening. So what you end up and what you will continue to end up with, in my opinion, is badly designed populist policies. But that's not what, but it's not what it should be. What you should really have is a group of, you know, experts who, who come from a starting point of something has to be done on inequality. But at the moment, unfortunately, you know, we don't have that. But I'm hoping the end result is, what it ends up with is people like me, unfunded, running a YouTube channel, trying to build like a global tax think tank. And it's absurd. It shouldn't be done by me.

• 20:49Speaker 05

  But what are the Democrats doing on this? The fact that Labour have not done anything is just a comedy, to be honest. It is really absurd.

• 20:57Scott Galloway?

  So my understanding is the non dom was all of a sudden, people who had people who had come from abroad could maintain their tax status in London and avoid what they see as a pretty onerous estate tax or wealth tax. And as a result, I don't know if it was a thousand or 10,000 millionaires have left. I know a couple of people have moved to Milan or Dubai.

• 21:22Speaker 05

  Well, there's a lot of questions about the exact numbers here. And there's a lot of speculation that perhaps some people and some groups have tried to put out misleading or inaccurate numbers, but you know, I'm sure some people will have left. We probably don't know the exact numbers on it.

• 21:34Scott Galloway?

  But explain, explain the effect of it. If I, if I live in the UK and I'm worth a hundred million dollars and make five million dollars a year, what does a new taxation policy mean for them? And why have reportedly so many people decided it's too onerous and they've left?

• 21:51Speaker 05

  Well, these people were basically allowed to not pay effectively any taxes at all, right, at least foreign billionaires. That's what the non dom situation was there for. And to be honest, you know, different people differing opinions on how this affects the UK, these people leaving, because these people were not paying tax in the UK anyway. And they would definitely have been driving up rents and house prices in London. But some people would say they would be bringing economic benefits to London. I think it's, listen, you can have a question about whether you want to allow foreign billionaires to live tax free in your country. That is essentially, this is, this is what the non dom rule is about. It is a question of, do you want to allow foreign billionaires to live tax free in your country?

• 22:33Speaker 05

  It's, it's probably, you know, from a sort of moral ethical stance. I think it's questionable how good a choice this is. But some would argue it has economic benefits. The big question is, do you want your domestic assets, the assets of your country, to be owned by foreign billionaires? And I think it's important to recognize that these are two separate questions. And to be honest, I don't have any particularly strong opinion on whether the UK or the US should allow foreign billionaires to live tax free in their countries. Because to be honest, that's not what I'm concerned about. What I am concerned about is the loss of wealthholding of British and American families and the British and American governments.

• 23:18Speaker 05

  That is, and if these foreign billionaires don't own British and American assets, then they are not the people who are squeezing out the British and American public. So in a sense, it's not really connected to my campaign in any way. What I'm talking about is taxing the people who own your country, who own your wealth. Because that is the wealth ownership which you can affect and which you can influence with your taxation policy.

• 23:42Scott Galloway?

  We'll be right back after a quick break.

• 23:57Scott Galloway?

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• 24:57Scott Galloway?

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• 25:16Scott Galloway?

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• 26:04Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls and playing catch-up when audit season comes around again. Vanta works differently. The Regent Trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?

• 26:49Scott Galloway?

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• 27:19Scott Galloway?

  You talked, you brought up Miram Dami, and he's proposing a pied-à-terre tax, where essentially, if you're on a second home worth over $5 million, you start to pay an annual tax. And I think if you own a $10 million condominium in Manhattan, and I'm asking for a friend here, it taxes you about $100,000 a year. And my sense is, look, no one likes taxes. I especially don't like taxes that are going to impact me. But as far as a taxation goes, taxing very wealthy people who have a second home somewhere, it effectively is almost like a wealth tax, right? Because it just reduces the value of their second home. They transfer a certain amount of the value

• 28:04Scott Galloway?

  of their second home to the government. This, to me, and I haven't seen, I'm sure there's costs that can be cut in New York, but I find this a fairly, I don't know, the idea of decent tax policy, targeting the very wealthy. If you own a second home worth $10 million in New York, you're probably making pretty good money. And this is not an easy tax to avoid. If they decide to sell their house, someone will pick it up. It's basically a transfer of wealth, of the value of second homes, to the government. And this, to me, strikes me as a decent tax. Apologies to the word salad, your thoughts?

• 28:38Speaker 05

  It's clever, because if we compare it to what we just discussed, right? Which is the non-dom, the non-dom tax. The non-dom tax, you're trying to raise tax on foreign billionaires who own foreign assets. This is a group of people over which you, the British government, the American government, has a pretty weak hold, right? Because they're not citizens of your country, and they own enormous amounts of wealth, not in your country. These are the people who most easily can leave. And what I said to you was, you want to tax people who own the assets in your country, because these people cannot escape the tax. And I think what Miram Dami has done there, I'll be honest, I was quite impressed, because you probably picked up from our conversation so far, I am worried about bad implementations coming into

• 29:22Speaker 05

  Place. Um. And what I saw when he did that was pretty much exactly as you say, this is canny in the fact that it's targeted. It will effectively hit, I would imagine, pretty much exclusively very wealthy people and very wealthy people who cannot avoid the tax. And that is smart. But I want to be clear, in theory, in principle, it is a lot less fair than a wealth tax or an estate tax, right? Because this is taxing a specific subset of wealthy people, people who own very expensive second homes. It's a pretty good proxy because a lot of wealthy people will own second homes. Um. But, you know, how much is it going to hit the real problem, which is like Jeff Bezos, Elon Musk? In reality, it's it's not. So I think it's a cleverly designed tax. It's well targeted.

• 30:07Speaker 05

  It reassures me that there are some people working on the design here who are canny and practical and are cognizant of the risks of flight. But the real big problem, especially in a country like America, is the real big dogs, right? It's the musks, it's the Bezos, it's the billionaires. Um. And this tax is not going to hit them. So clever tax, well designed, not the complete solution. But of course, Zohar Ramdani is not the president, right? He's the he's the mayor of New York. So I think he's he's designing a good, uh, uh, he's what he designed well attacks in the context of the powers that he has. But I think we could do more to fix the real problem if we start talking about what national governments can do, which is obviously more.

• 30:52Scott Galloway?

  I'm fascinated with tax policy. I was excited about this conversation. So I'm um, I'm a fan of the idea of, if you think about it, basically, assets grow tax deferred, income as tax hit every year. I think that at a very simple level, that is one of the major drivers of wealth inequality. And because because earners are taxed every year, it's hard for them to ever become owners. The people who are fortunate to become owners, become super owners because their assets increase in value tax deferred, whereas your asset, your sweat gets clipped thirty, forty percent every year. So I like the idea of going after assets in the sense that

• 31:31Scott Galloway?

  you, if you borrow against the common strategy, the wealthy, you buy stocks, you never sell, you borrow against them to fund your lifestyle, you die, step up in basis, they're never taxed. What about the idea of taxing? It triggers a capital gain event in your tax when you borrow against your assets.

• 31:51Speaker 05

  It feels to me a little bit technically messy. I think it would be, I mean, I'm not necessarily against it. I think the most, the more obvious and graceful solution is to just stop, step up at death, which seems, I don't see, for those who don't know, this is the, the idea is, you know, you, you pay your capital gains tax when you sell, um, and rich people can solve that by never selling. And every time they die and give their assets to their kids, the, the purchase price gets re-updated to the, the price when they inherited it, which basically means capital gains tax never gets paid by the rich. Um, the reason, again, this doesn't actually solve your Bezos Musk problem. And I think, you know, I know, I know Bezos and Musk are only two people,

• 32:34Speaker 05

  but what they stand for is the billionaire class, which these are the guys who are really going to eat everything, you know, the rate at which these guys are going to go. It doesn't solve that because people like Bezos and Musk, they use, as you say, this borrowing solution. So, but the reason they borrow is because it means they never have to claim any income, right? And they're using the borrowing to cover their day-to-day spending. And of course, the day-to-day spending of somebody like, like Bezos is obviously massive, you know, famously, he rented out the whole of Venice for his wedding, whatever. From the perspective of an ordinary person, his day-to-day spending is enormous. Bezos's lifetime spending is nothing. It is a drop in the ocean compared to Bezos's lifetime income. So if you try and fix

• 33:15Speaker 05

  this problem of his borrowing against, this thing that gets made a lot of in the, you know, on social media and the press, which is these guys don't pay tax because they borrow against it. To be honest, that is, is actually, that is not really the, the problem. Because that is to cover their spending and their spending is like less than like point one percent of their lifetime income. The problem is quite simply that they pay an incredibly low percentage of tax as a percentage of their lifetime income. But to be honest, it's, it's not even that. It's not even that. The problem is quite simply, if you do not tax very rich people like Bezos and Musk at really very high rates, the problem is quite simply compound interest. It's as simple as that. Even if you were to successfully tax Bezos and Musk at forty percent of life-

• 34:00Speaker 05

  Time income excluding inheritance. And once you start including inheritance, then you can actually stop aggressive wealth growth. But if you were to tax them even at forty percent, which is, you know, a million miles from where you tax them now. Their wealth would still grow much faster than the economy. The question here is really, it's quite a simple mathematical question, right? Do you want everything to be owned by the tiny elite or not? If you do not want everything to be owned by a tiny elite, you have to aggressively tax extremely high levels of wealth. Because otherwise, if you're Jeff Bezos, what is, what's he worth? Three hundred million dollars, three hundred billion dollars, right? Even if he makes five percent a year, right?

• 34:41Speaker 05

  Which he's gonna make way more than that, even if he makes five percent a year, he's making fifteen billion dollars a year, right? And it's just gonna grow, right? It's gonna grow unbelievably quickly, right? So really, to be honest, I think the borrowing thing is, it's a bit of a myth. Because the amount that these guys borrow is immaterial relative to how much they earn. So I think that's a little bit of a red herring.

• 35:09Scott Galloway?

  It strikes me that the most effective and simplest way to get at this problem would just be an AMT. Corporations in the US, I don't know how it is here in the UK, paying their lowest taxes since, I think, nineteen twenty nine. You talked about, mentioned the, what's happening in the UK in terms of the wealthy not paying, or the super wealthy not paying their fair share, absolutely the same thing. And this occurs because of loopholes that are inserted into the tax code. It's actually, I find that the argument, and you made this point, is a false argument in that as we argue about tax rates when we should be arguing about tax code. There are five Fortune one hundred companies that don't pay any taxes. I took advantage of something called twelve oh two with the first ten million in proceeds when I sold my last business was tax free, which quite frankly just makes no fucking sense.

• 35:53Scott Galloway?

  I don't understand why entrepreneurs don't pay taxes. On a gain. But anyways, wouldn't the simplest, most effective means of maintaining a progressive tax structure, raising revenues and addressing these problems without going after individual loopholes just be an alternative minimum tax?

• 36:11Speaker 05

  Yeah, so the big proponent of this minimum tax is Gabriel Zuckman. Have you spoken to him? Have you had him on? Right, so for the-

• 36:16Scott Galloway?

  I haven't.

• 36:17Speaker 05

  Oh, well, you should. I mean, if you're interested in this, like, he is the guy on Tax Code, you know, much more than me. That this is, anyone who doesn't know, Gabriel Zuckman is a French economist working out of Paris, who is trying to basically bring in a minimum tax, exactly as you say, on billionaires. And he's basically saying everybody should be paying at least their 40%, you know, including billionaires. First thing to say, I'm 100% supportive of a minimum tax rate. And at the moment, ordinary people in America and the UK are paying their 30, 40%, and billionaires are paying effectively nothing.

• 36:52Speaker 05

  It would be an improvement, but even if you were to tax billionaires 40% like an ordinary person, it would not be enough. Unless you have a rapidly growing economy, which we don't, it would not be enough to stop their wealth growing. And if their wealth is growing quickly in economies that are not growing, that wealth is going to be coming from somewhere. And I think that the big part of the story that we've had in the last 20 years, but especially the last five, six years since Covid, we've had this context of simultaneously rapidly growing wealth at the top end, in particularly billionaires, and this collapsing government wealth, and significant falls in middle class and working class wealth.

• 37:32Speaker 05

  And what constantly amazes me is how few people seem to recognize that these two things are the same thing. Our economies have not grown. Billionaire wealth has exploded, and government wealth has collapsed, and middle class, working class wealth has collapsed. That is the same thing. That is wealth transfer. That is two sides of the same coin. And that is quite simply what happens if you allow a billionaire class to go on tax. But the truth is, if you were to raise billionaire income tax effectively up to 40%, which it should be, because that's what ordinary working people pay, but you kept billionaire inheritance tax and wealth tax at zero, you would not stop wealth transfer from continuing. You would only slow it down. That's the truth. And I think what, if you look historically-

• 38:16Speaker 05

  The reason we had these like fifty years, well, what you wanna call it, thirty, forty, fifty years, the golden age of capitalism after World War Two. We kind of lucked into that by accident, right? Because we had these very high rates of income tax and we had these very high rates of inheritance tax. And for people who don't know, both in the UK and the US, we're topping these out at sort of ninety percentish back in these thirty, forty years after World War Two. Even though, I don't think that was a perfect tax system, but because it targeted a lot, it didn't hit the very wealthy more than it hit your high earning workers, like famously the Beatles paid ninety-five percent, you know, this kind of thing. And, you know, much, much richer people were not paying more. What it did was, it stopped there from being a class of incredibly rich people who are

• 39:01Speaker 05

  rapidly growing their wealth share. That's what it did. And as soon as you cut those taxes down, which we obviously did in the eighties, in the UK and the US and eventually all over the world, suddenly you open the box and you let out, you allow there to start to be a class of people who aggressively increase wealth share. And that comes from everybody else's wealth share and this was such an unbelievably naive thing to do. And I think this could only have happened, in my opinion, because of those thirty, forty years where we thought, you know, everything could just be perfect for everyone. And we forgot that the last two thousand years of human history is everybody being unbelievably fucking poor while ten people own fucking everything. You know, that is the history of Europe, right?

• 39:44Speaker 05

  And we, we managed to stop that for a period of time. You know, if you look at the sort of the founding fathers and the start, the founding of the US, they have all of these ideas about we have to stop aggressive concentration and accumulation of power. We have to prevent that. We have to have division of power. We cannot allow the America to reproduce the mistakes that have destroyed Europe and created a Europe of disgusting inequality and poverty. And then we created finally, you know, in this thirty, forty years after World War Two, we had this situation where ordinary working men and women could go out, get a regular job, buy a house, have a family, get a retirement, get a pension, have holidays, have a good life. And we did not have essentially a rapacious super wealthy class owning everything. And then in the eighties, we were like, you know what?

• 40:29Speaker 05

  Let's just give it back to them. Let's just give it fucking back to them. And you, you, you, you have a choice. You have a choice, right? Either, and it's just purely because of compound interest. If you allow the people with all the wealth and the power to use that wealth and power to take the rest of the wealth and the power from the less powerful, they will do it. All of history tells us that is true. It's as simple as that. All of history tells us that is true. You, you have a choice. Either very high rates of tax on the very rich or extreme inequality and poverty. Those are, and all, tell me one point in history that disproves that.

• 41:05Scott Galloway?

  The, the, I think, I think the only exception to the rule is occasionally a nation is blessed with some sort of natural resource that gives them abnormal errant wealth. And they can have both low taxes and support the middle class because they're making billions in oil revenue or something else, but I-

• 41:20Speaker 05

  If you look at the early US, the early US has effectively infinite land to grow into, right? And then, and then what you can have, a rapacious billionaire class that wants to rapidly expand without eating its own, because it has infinite resources to eat into. But once, once those hit the boundaries of the, the infinite limited resource, if you allow them to keep growing their wealth when the economic opportunities for rapid growth have stopped, then you know, I mean, this is why obviously you see, this is, this is why colonialism happens, right? Because you have this rapid growth, you have the creation of a billionaire class in Europe, and then they rapidly run out and eat the entire world. And what happens when they eat the entire world? World War One. You know, this is, this is what, this is what happens. You, you, you simply cannot allow

• 42:04Speaker 05

  a tiny group of people to own everything. And if you don't tax them, you know, this, this is just the, the force of compound growth. You know, if you allow these guys to grow, then that means, you know, the people listening to this now, how are their kids gonna compete for ownership with, with Bezos's and Musk's kids? When they're growing their wealth at 10, 15% a year? And if you tax them at 40% and don't tax them on wealth, don't tax them on inheritance, then all that means is instead of going at 15% a year, they grow at 10% a year. And it's still too much. That's the truth.

• 42:35Scott Galloway?

  I see it as, and I think it's just different sides of the coin that conservatives or the incumbents have managed to convince the general population. That the middle class is a naturally occurring organism. And I don't think there's any evidence of that. I think it's actually an accident in history by a group of progressives who said, unless we redistribute income, the middle class dies. And it feels to me that the only way we make progress is for economists and historians to say, the middle class is an experiment and something that requires, and I'll use the R word, it requires redistribution, that the luckiest and the most talented among us who become very wealthy have to give a disproportionate share of their wealth back to the middle class

• 43:20Scott Galloway?

  or the middle class dies. And we're returning, to your point, to the way history has been 99% of history. From 45 to 2000, the equalization of equality was the anomaly. And it doesn't happen naturally, that if we don't interject and recalibrate the law of the jungle, it goes back to the jungle. Isn't it just, we need to puncture this myth that the middle class is a naturally self-occurring healing organism?

• 43:54Speaker 05

  Once you allow there to exist this class of people that rapidly, rapidly, rapidly grows their wealth share, then what you will see is the weak holders of wealth will be picked off one by one. And I think the first weak holder of wealth, which, to be honest, we've already lost, was the Western poor. So, you know, I talk about my dad quite a lot. My dad worked for Royal Mail, the post office here in the UK for 35 years, earning £20,000 a year, low earner. And he's born in 57, so he's working in 70s, 80s, 90s. And he's able to buy a house and get a pension and get retirement. And what you see here is this like freak occurrence, which is incredibly rare in history,

• 44:35Speaker 05

  of people in the bottom 20, 30% of society being able to accumulate wealth. And that's gone, that's gone. And this is the first group of people that lost out when we start creating a super rich class. And the reason that they were able to be lost is because they thought we lived in a world where I don't need to give assets to my kids because work can accumulate assets. And as you say, that was only possible because they lived in this very unusual period of time where you did not have a tiny group of people eating everything. So they thought, I don't need to worry about protecting my wealth, protecting my wealth, because we live in a world where working gives you assets.

• 45:18Speaker 05

  And you see, it's really interesting. I grew up in a very, very immigrant area of East London. And you see this difference between the English families and immigrant families, which is the English families thought, we don't need to give wealth to our kids, because work gives wealth. But these Indian families have come from poverty, have come from a very unequal society, and they recognise, no, working people don't get assets. We're going to work our tits off, and we're going to make sure we get some assets. You know what I mean? So I think people need to recognise, yeah, it wasn't normal, but it can be normal again. You used the term accident of history, and I'm going to push back a little bit on that, because it wasn't an accident of history, Scott. This is the result of generations and generations and generations

• 46:02Speaker 05

  of working men and women getting their heads down in abject poverty and working and struggling together so that their kids and their grandkids will have a fair share. That's what it is, Scott. And to be honest, whether this country and whether the future of the UK and the US is the kind of poverty that my granddad lived in, or the kind of relative security that my dad lived in, is a simple question of whether the men and women today get their heads down and work together to protect the position, the collective power position of their kids the way that our grandparents and great-grandparents and great-great-grandparents did. That's for me, to be honest. I don't like using this term, but it is class struggle. It is class struggle, because that's what's happening.

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• 49:05Scott Galloway?

  We're back with more from Gary Stevenson.

• 49:09Scott Galloway?

  The next topic I'd love to get your insight on is, I'm constantly asked, what is the difference between the UK and the US? And I struggle to explain.

• 49:18Scott Galloway?

  Why the UK has done so much less well than the US? Because when I look at the underpinnings of the UK economy, I think the education system here is superior to the US. I've had my kids for extended periods of time in the US education system, in the European, in the British school system. And while, obviously, it's situational, I find, on average, the approach to education here is better. There's tremendous IP. There's a decent argument that AI was actually invented in UK universities. Great culture, rule of law, a general kind of zeitgeist of fair play. People from all over the world want to live here.

• 50:01Scott Galloway?

  It just feels like all the under, and a strong immigrant population. It feels as if all the underpinnings are here. And yet, if you take out London, the household income of the UK is lower than the poorest states in the US. And it feels as if there's no growth here. I'm curious to get your, if you were to summarize, and also, growth solves a lot of problems, right? The way I think the US, if they ever address its deficit, will not only be fiscal responsibility, but the fact that we're growing, that just kind of helps everything. Whereas the UK doesn't appear to be growing. I'm curious, at your meta level here, what do you think the big difference is between the US and the UK, both in terms of culture and economic policy,

• 50:41Scott Galloway?

  that was resulted in, one, 1995, same GDP per person in Europe as the US? Now, I think we're 30 or 40% more. What's, what in your mind is the difference?

• 50:52Speaker 05

  I think, just first, before I get into that, it's important to recognize that I think sometimes these narratives of US outperformance do sometimes gloss over the fact that a lot of the better, big level macro numbers from the US are really not filtering down to a lot of the American public. So obviously, US has had higher GDP growth, and this is true.

• 51:10Scott Galloway?

  Average versus mean.

• 51:12Speaker 05

  Yeah, and I think it is important to recognize that living standards for a lot of Americans have really significantly fallen. Financial security for a lot of Americans have really significantly fallen, and poverty has significantly fallen. But that's, that's not to say your point is untrue. I think like the UK, I think when the UK... The last fifteen, sixteen years, the UK has been really the standout weak performer in the western world in terms of economic growth, you know. Some interesting things have been happening in Japan the last couple of years, but I think really the UK is, yeah, it's, it's, it's the big one. You know, I started working in two thousand and eight and at that time, I think the UK was probably seen as one of the strongest, if not the strongest economy in the world, really, of, of big countries.

• 51:55Speaker 05

  And the collapse has been pretty catastrophic. Um, and you can trace that back to, you know, quite simply, a number of, of really catastrophically bad economic and political decisions. Uh, the first of which is austerity, you know, so for Americans that don't know, you know, and this is very relevant for Americans, given, you know, the Doge and the, the recent aggressive attention on, on government cost cutting. You know, we had our cost cutting experiment in the twenty teens, right? So we had the David Cameron, uh, the start of the conservative government was in, in two thousand and ten and their big economic plan was to aggressively cut back the state, right? It was austerity. And then what you have is this insane period of ten years of zero interest rates, when

• 52:39Speaker 05

  the government could have been borrowing and investing essentially for free, when what they're actually doing is just basically dismantling the state and, and dismantling all of the protection systems for the poorest people in the country. And, and basically creating a permanent unsupported underclass in the country. Like this is, and you know, other countries did this to various degrees, you know, you look at, for example, Greece, which is effectively forced into doing it. Um, but you know, with the benefit of hindsight now, with, you know, long term interest rates in the UK five percent, the fact that we had ten years of zero interest rates and chose rather than to invest at that time when investment was free, like they could have literally just borrowed and bought the stock market and they would have been like incredibly rich, but instead they, they basically did the exact opposite of that anti-investment.

• 53:23Speaker 05

  Um, it was a catastrophic economic error. Uh, you was, and you know, I think this, this is really relevant for anybody watching now in the US because, you know, the US is, is starting to look at this narrative as, you know, the way to solve our economic problems is to dismantle the state. Um, you know, did it work for the UK? You know, did it work? It was a catastrophe. And then, obviously, you know, after that, you don't need me to tell you, obviously, Brexit. You know, I don't think you'll find many economists who think that that was wise, or at least a wisely implemented economic policy. But, you know, what is happening now in the UK is happening all around the world. I did a video a couple of weeks ago, which looked at the share of like seats in Parliament going to the main two political parties.

• 54:08Speaker 05

  So you will be aware that, you know, across the world, we have had for a long time, essentially two-party politics with a big centre-left party and a big centre-right party. And since 2008, the financial crisis, that has basically ended. And you can look all across Europe and you see these parties used to take something like eighty or ninety percent of the seats, depending on what country you're looking. And now they're down to thirty or forty or fifty percent of the seats. And in many cases, it's not even the same two parties because they've collapsed. And what that is, essentially, is the Western world, across the Western world, and it's definitely happening in the US, is the Western world that saw, that hasn't, has seen living standards consistently fall since 2008 and has not been given a solution

• 54:50Speaker 05

  by any major political party, which is turning on itself and saying, well, what the fuck do we do? What the fuck do we do? And every country is trying to figure out how to stop living standards from falling. You know, and the UK settled on Brexit, which was, to be quite honest, a shit answer. You know, the US is looking at Trump, that's not going to work either. You know, I'm out here making a pitch. I think unless you stop aggressive increase in inequality, you are going to see living standards collapse everywhere. And it's really important to recognise, as much as, you know, the UK has become the sick man of Europe, and I don't deny that, living standards have collapsed everywhere, Scott. In France, in Italy, in Spain, in Japan, in Australia, in America, in every country, living standards are falling. So, yeah, look, you know, I don't think the UK's done a great job of it in the last fifteen years.

• 55:35Speaker 05

  And if you want me to put that down to two things, it's austerity and Brexit. But the truth is, this is happening everywhere.

• 55:43Scott Galloway?

  What? By the way, Gary, I always find when I talk to you, the time, literally, the time-space continuum goes on pause. I can't believe we've been talking for 56 minutes. So if you, if, if there was some sort of star chamber of Fed chairs and heads of tax policy across the West, the G7, and you could implement one or two policies to, to effectively go after income inequality without lurching too far to the left and stopping growth, there are some dangers. We have a tendency, the clock appears to never be at center. We have a tendency to swing back and forth, and I would argue that some of the taxation policies, progressive policies in the 70s and 80s may have actually, you know, done what the rich catastrophize about, and that is slowed growth.

• 56:28Scott Galloway?

  What are the one or two policies you would want to see implemented across the West to try and address income inequality effectively?

• 56:34Speaker 05

  So I push more on wealth inequality in particular, because I, really, if you're, if you're working for your money, you've already lost, basically. It's about wealth inequality. I think the two, you, it needs to be taxes which aggressively go after the top 1%, not of earners, but of, of holders. This is, this is, because at the moment, we have an unbalanced system, which, which does aggressively, in most cases, tax high earners, but does not effectively at all tax high holders, high owners, high hoarders. I think the two taxes which have the real power to get wealth back into the hands of ordinary families are wealth taxes and estate taxes. But I think when you bring them in, there's gonna, there would be, the debate always tends to focus on rates, but really, the

• 57:19Speaker 05

  question should be entirely about avoidance. How do we bring these taxes in, in such a way that the super-rich cannot avoid them? And I think, to be honest, the real way that you do that is exit taxes and tax on foreign owners. Because if, what, if they leave, and they're still being taxed on their holdings of American assets or British assets...

• 57:42Speaker 05

  Then you then they can't afford to tax without selling the assets. And then that means you can you can get your assets back. I think really, I think this is the key here. And look, China would not allow you or I to own ten billion dollars of Chinese assets. And when they come to us at the end of the year and say, hey, can we get our tax on your Chinese assets? We say, hey, I live in Marilabone because it's good for my dogs. You know what I mean? They're not going to listen to that, you know. You know, and I think we I think we're stu we're stupid, but we're not. The thing is, we're not stupid because the people who set the tax policy, it's fucking working for them. It is fucking working for them. And that is why I don't talk really, well, I mean, I do increasingly more and more. But I don't talk primarily to politicians.

• 58:24Speaker 05

  I talk to the public because I honestly believe the politicians, especially the high level ones. Listen, David Cameron made ten million pounds within a year of leaving office. Is he gonna be the guy, you know, Rishi Sunak's father in law is one of the richest men in the world. You know, are these guys gonna be the guys who change tax policy against the very rich? It's it's not gonna happen. So really, my message is not so much to the politicians, it's to the British and American people. I guarantee you, unless this is pushed for aggressively by the public, it will not happen. And ordinary people see their kids and their grandkids be significantly poorer than they are. So to be honest, I don't want to talk to the politicians. I want to tell the public because they are the guys who will fix this if it ever gets fixed.

• 59:09Scott Galloway?

  Well, you'd like to think we have a democracy and if enough people buy into this philosophy, they'll elect people who will also they can hold accountable. The notion of taxing wealth where it is, or I would argue it's been created, has trickles down to, I think, state taxation policy. So for example, Jeff Bezos just announced he's moving to Florida to spend more time with his dad, which is adorable, but is a lie. And that is he aggregated one hundred and twenty billion dollars in wealth using the great infrastructure, the great state of Washington, their schools, their hospitals, their technology. And then about the time he's going to register those blessings, he pieces out to Florida, so he doesn't have to pay back to Washington taxes. I mean, it seems to me that a very basic policy of paying taxes on where you have assets

• 59:54Scott Galloway?

  and where you aggregate wealth. Kind of makes sense. And to your notion of the tax gap and tax enforcement, supposedly there's $750 billion a year in the US of taxes that are owed to go uncollected. And I don't know if the same, and this is might be my final question, but in the US, the biggest tax cut that no one has ever seen is that they basically neutered the IRS. And if you're very wealthy, you're encouraged not to hide income, but to be as aggressive as possible because AI can audit your taxes. It can audit lower middle class households, but it takes an army of auditors to come in and audit the wealthy such that, again, you neuter the IRS. That's the greatest tax cut in history. Is the same thing happened in the UK?

• 1:00:39Speaker 05

  I think they definitely should fund it more and they would get more. But I think the reason that they've been able to sort of defund the tax collection agency is because nobody is protecting the brand of tax in the eyes of the public. I've been thinking about doing a series of videos called The Joy of Tax because people hate tax. Obviously, people hate tax. Nobody wants to pay tax. So it's like really, but this is why Margaret Thatcher and Ronald Reagan could do what they did and slash taxes and basically destroy the poor and have the poor actively cheer on their own destruction because people hate taxes. People need to understand what tax is. Tax is your army that protects you from your domestic billionaires. If you do not have an army, then you can't stop Putin. And if you do not have an IRS, then you cannot stop Musk and Bezos. And both of those groups

• 1:01:24Speaker 05

  of people want the exact same thing. They want your mom's fucking house and they're gonna get it unless, this is it. Listen, if you do not fund your army, you will get invaded by a foreign army. And if you do not fund your IRS, then Elon Musk will have your mom's fucking house. This is your army to protect your assets from your domestic billionaires, your domestic, and they are the real threat to the American public's wealth.

• 1:01:49Scott Galloway?

  Well, let me, let me provide a suggestion. I think, I think so much of this, because you have such a huge following. I think so much of this comes down to words. And I think we would be much more effective in restoring a progressive tax structure if we, instead of calling it an estate tax, we called it, or a wealth tax, we called it a hoarder's tax. Because that's effectively what I see is going, going on, is a hoarding. And just as we felt we built a resentment towards people hoarding hand sanitizer or toilet paper during COVID, is it any less damaging to be hoarding wealth well beyond what you and your kids will ever need? I mean, shouldn't, shouldn't it be a hoarding tax? Your thoughts?

• 1:02:29Speaker 05

  Yeah, you know, I've thought about using the term hoarding more. The inheritance tax, estate tax, have been massively, massively, massively demonized for a long time. And I understand why. I think the most obvious thing that you should do to change estate tax is change the timing. There's no reason why, there is absolutely no reason why that tax needs to be timed at the time your dad dies. There's no reason. You know, your dad dies when you're 30, and my dad dies when he's 17, and we pay the tax at totally different times. Set it on your dad's 110th birthday and set it at an incredibly high rate on incredibly high amounts. Simple as that. And then it's, then it's not, it's not, it's not a death tax anymore, it's a hoarding tax. But what you, what really needs to be done is people need to understand that if you

• 1:03:13Speaker 05

  allow the super rich to accumulate wealth very quickly, what that means in very literal terms is your family loses its wealth and your government loses its wealth. You know, that's, people need to understand that we do not live in an infinite sum world. And you cannot have a group of people who own everything unless you and your group of people own nothing. I think if you, if you generate that understanding, to be honest, and that's the number one, what I want is to be in a very situation where if I walk out here and go on the street and pull, pull some guy over and say, why do you think living standards are falling? Why do you think your kids will be poorer than you? And I want 70% of people to turn around to me and say, because of growing inequality. Simple as that. If I achieve that, then this problem will fix itself.

• 1:03:54Scott Galloway?

  Gary Stevenson is a former trader turned economist and activist behind Gary's Economics. His work focuses on rising inequality, wealth concentration, and economic policy. Gary, I always love listening to you. I think you're able to kind of distill fairly complicated concepts down to kind of basic human emotions and, and, I don't know, just rationale and reason. I think you're doing great work. Very much appreciate your time, Gary.

• 1:04:21Scott Galloway?

  This episode was produced by Jennifer Sanchez and Laura Janer. Kami Reek is our social producer. Bianca Rosario Ramirez is our video editor. And Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from Prop G Media.

• 1:04:42Speaker 07

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