Welcome back to Gary's Economics.

Today we are going to talk about

if you tax the rich, they’ll leave.

We have done a video on this channel

about whether it is possible to tax the rich before.

I did it about a year ago.

I went and watched it before I did this video.

And the reason I watched it is

because we have been getting tons

and tons and tons of comments,

which is you can't tax the rich they’ll leave.

You can't tax rich they’ll leave.

It is by far the most popular comment on the channel.

It's the most frequent criticism

to whether you should tax the rich.

So I didn't want to do a video

because we'd already done one before,

but I went and checked and it's only got 10,000 views.

And obviously since then the channel has grown a lot.

We've got a lot of new people.

This is clearly the number one concern

about why we cannot tax the rich.

So I wanted to do a video, deal with it head on.

And explain really, really clearly why we can

tax the rich.

Okay.

So this argument

that we cannot tax the rich because they’ll leave

is basically based on a confusion

between rich people who are rich

because they have a good job

and they make money from their work,

and rich people who are rich

because they own a lot of assets.

Now, ordinary people don't have great visibility

with regards to extremely wealthy families, families

who have

asset hoardings of £10 million, £100 million, £1 billion.

So ordinary people,

when they think of the rich, they tend

to think of people with good jobs

doctors, lawyers, bankers, businessmen,

people who might earn 100, 200,

maybe even more thousand pounds a year.

and these people,

if you tax them, in many cases, they can leave.

I was a trader for a long time.

I made a lot of money when I was doing that.

I paid a lot tax,

but if I wanted, I could have gone to work in

most famously Singapore, which has a lower tax rate.

So it's possible for people who

have very high incomes from their work to leave

because they get their money from their work

and they can work anywhere in a higher

tax country or a low tax country.

When I talk about taxing the rich,

I'm not talking about these people.

And I want to make it very clear from the start.

I said it a lot of times on the channel,

but I think some people still don't recognise it

when I talk about taxing the rich.

This is not about highly paid workers.

This is about individuals and families

that have tens

or hundreds of millions of pounds or dollars in assets,

maybe even billions of pounds or dollars in assets.

These are the people I want to tax.

Now, when we consider a billionaire

or somebody worth, let's say, £1 billion or £100 million,

they do not get their income

from working in the vast majority of cases. If you are,

say Rishi Sunak who’s worth £700 million, he owns assets,

he owns assets, this is, he owns buildings,

he owns properties, he owns companies,

he owns debt, for example

he owns your mortgage, he owns the government debt.

This is what rich people own.

They get their income as what is considered

passive income.

They get it whether they work or not

because it doesn't come from the work,

it comes from their assets.

And what this means is it comes essentially from you.

They own your house,

they own the supermarket you shop in,

they own the fields that produce the food that you eat.

They own the natural resources

which produce the electricity you use.

They own the office block that you work in.

They own your mortgage, they own the government debt.

So when you pay taxes, it goes to them.

If you don't understand this concept of what wealth is

and what wealth ownership is, I really recommend

you watch the video on the channel called What is Wealth.

We also,

I think we're going to put this out the week

after we do a new video explaining really clearly what wealth is.

So this is the difference

between somebody who works for their money

and somebody who owns for their money.

Working people can leave and work in another country.

But if I own £1 billion

of UK government bonds or £1 billion of UK property,

regardless of whether I live in the country or not,

that money is coming from you,

when you pay your rent and you when you pay your taxes.

Rich people who are rich,

rich through asset ownership, asset hoarding,

they get their money from you.

So this is the key thing to understand, right?

I'm not talking about taxing working people.

I'm talking about the people that own the assets.

They own the assets of this country.

They own British assets.

They own the land. They own the buildings.

They own the companies. They own the debt.

They own British assets.

So let's talk about these people. Can they leave?

So at the moment

we have a tax system in this country

which is common in western countries.

It's same in Western Europe, it's the same in the US,

which taxes you based on where you live.

And what that means is I could go into France

if I was a billionaire and buy

€5 billion

worth of French property of French businesses,

and then I could leave,

I could move to the Cayman Islands,

and I could take loads of French rent payments, French

mortgage payments,

money from French customers

and basically pay no tax on it.

Because even though I own half of France

or half of Britain or half of the US,

I don't live in those countries, so I don't pay tax.

And this is basically,

a completely absurd tax system,

which we don't have to use. Not every country does this.

China doesn't

allow you to own half of China

and not pay any tax on the money

that you extract from Chinese people,

because you don't live in China.

Other countries don't allow this.

We do allow this but we don't have to.

The basic fact is,

if you own a tonne of British assets,

be that

companies that sell to British

consumers, British homes, British debt,

British land, British natural resources,

your money comes from Britain.

And that would be the same if I was talking about the US,

if I was talking about Australia,

if I was talking about Germany or France,

you exist in a country that has real assets.

Those assets are owned by somebody.

And whenever you use those assets,

you pay that person and the money comes from you.

So this is the big reason why

the very richest people in society

are actually the easiest technically to tax

is because, if I'm a teacher or a lawyer or a doctor,

I can go to Dubai, I can go to Singapore

and I can work in those countries

and I generate the money from my work.

If I'm rich and I own your country,

whether I leave or not, my money still comes from you

and it's...

I’m the least mobile person in the world

from a tax perspective.

Because whereas a worker can move

and work in another country,

the owners of the assets,

they all your country

and of course your country can decide

whether to tax them or not.

So I think once you understand this difference,

that taxing the rich,

when I use

it, is not about taxing working people,

it's about taxing the owners of the wealth.

I think what you can recognise from

that is the fundamental question we are dealing with here

is who owns your country?

Who owns the wealth of your country?

Look around you in the place that you live.

Look around you in the country that you live.

Look at all of the land.

Look at all of the buildings.

Look at all of the property.

Look at all of the productive buildings and machinery

and all of the natural resources.

Somebody owns that.

Who do you want to own it?

We are in a state of transition in the West,

where we used to have a large middle class

that owned a lot of the wealth.

They are losing that

through increased debt

and through decreased

direct ownership of things

like property, things like the stock market,

which are increasingly being owned by wealthy people.

If you allow the very rich

to own the wealth in your country,

claim that they don't live in your country

so that they don't pay tax on your country,

despite the fact

that all of the people in your country are paying their rent,

are paying their mortgages, are paying company

profits to these people,

it is inevitable that they will accumulate

more and more of your country,

and eventually you will lose your middle class.

And this is the reason that we do

everything on this channel.

And I think there's a kind of absurd thing

that happens here where,

I say tax the rich to protect the workers.

And very,

very rich people pay a lot of money

to pay a lot of people to tell you,

Gary wants to tax you.

The reality is,

unless you're a very rich person,

if you are part of the middle class

or even poorer than the middle class in your country,

you are losing your assets to the rich.

And the rich are not paying tax.

And I really think we need to start viewing tax

really, in the same way that we view an army.

The reason that countries have armies is to stop

foreign invaders from coming in

and taking all of the land and taking all of the assets.

That is happening.

It is happening now.

The middle class are losing their assets to the rich.

We can see that in decreased homeownership rates,

in more increased ownership of the stock market,

in much higher levels of debt from ordinary families

and from governments to the rich.

You are losing your assets.

You are losing your assets

and you are competing with people

like Rishi Sunak, who have passive incomes

of £1 million a week,

and there is no way for you to compete with them.

What they own is your assets.

They own your house.

They own the building you work in.

They own the building you shop in.

They own the bar.

They own the restaurants. They own the natural resources.

All of those things exist in your country.

They exist in your country, and you can tax them.

We don't tax them because in many cases

we have a very, very wealthy political class

that is funded by them

and just simply told you that we can't, but we can.

We can.

China does it.

Lots of countries have done it in the past,

but at the moment we have...

basically, I would argue there’s

a degree of political capture,

where the very rich not only influence

the politicians to not tax them, but to tax you instead,

but they also influence the media and the economists

to tell you that it's impossible to tax them.

Listen, these guys are not magicians.

They can leave the country.

The assets are here. We don't need them.

We need their assets.

It's about ownership of the assets.

It's about ownership of the country you live in.

Now, I want to be clear

when I say that it's possible to tax them.

That is 100% true because we don't need...

These are people who don't want we don't need the labour.

What we need is their assets.

The assets

exist in this country

or in the country, in the West where we live,

we can tax them.

That doesn't mean it's going to be easy.

I don't think it's easy.

I think it's going to be really, really hard.

But I don't do it because it's easy.

I do it because I think it's important

that my country and your country, whichever country is,

doesn't collapse into desperate poverty.

And the only way to protect the middle class

and the poor from the rich is taxation.

Just like the only way to protect you from

foreign armies is an army.

We don't have the taxation,

and we are moving back towards being a very unequal,

very high poverty society.

I campaign for taxation of the rich.

Not because it is easy, but because it is essential.

And, we are going to move into a period now

where we have a change of government in this country.

And if I'm totally honest,

I think that the previous government,

you know,

the Prime Minister is worth £700 million,

David Cameron made £10 million

in a year of leaving office.

They all went to the most elite private schools

and come from wealthy families.

I think that that government

was basically aggressively

protecting the class interests of the rich.

And, I don't think they ever would have given us

what we need in terms of stopping

the increases in inequality.

But we're going to move now into a period

of having a government which, rather than saying

we don't want to stop inequality increasing,

they will be saying it would be nice

to stop inequality increasing,

but it's not practical

or it's not sensible or it's too difficult

or it's not worth the effort.

Personally, I think it is worth the effort to stop

your societies from collapsing into desperate poverty.

and it's not easy, but it's essential.

And I think sometimes it's important

for people to try to do things that are difficult

because they are essential

to stop the collapses of their societies.

And previous generations did things like that.

And it is through the work of those previous generations

that I live in a country

which for a long time provided decent living standards

and housing and education

and healthcare to ordinary people.

That's not normal.

In most of the world

ordinary people don't get good quality

housing and education and healthcare and leisure time.

But we had it here in the UK and we had it in the US

and in Europe and Australia and Japan

for 50, 60 years

because people fought for it,

despite the fact that before they had it,

it had never happened before in modern society.

Taxing the rich will be very, very difficult.

It's possible these people are not magicians.

These people are not Gandalf.

They can't magic themselves

out of the country and disappear

all of the wealth out of the country.

The wealth is here. It is the wealth of our countries.

But if we allow it to be held

by a small group of extremely wealthy families

who pretend they live

in the Cayman Islands and pay no tax,

then we and our kids

and our grandkids will live in poverty.

So it's difficult, but it's possible.

I want to do it.

I'm going to keep campaigning for it

and I hope you support us on this channel.

This is the big question we can ask all the time.

Can we tax the rich?

Okay, it's not about working people.

It's about the people who are hoarding our assets

and stealing our countries. The assets are here.

The wealth is here. We can tax it. Thank you.