The UK has betrayed its capitalist class.
To be clear, this is not about multi-billion-pound hedge funds. This is about the ability for an ordinary person to transition from being a labourer to being financially free. To move from selling their time to owning capital, and allowing that capital to work for them.
The UK has betrayed, and continues to betray, this transition in social class and social status. Moving from labourer to capitalist is no longer championed, praised, or celebrated in the United Kingdom, at least not in the way it once was when I was growing up.
Start with the capital gains allowance. It once stood at an already modest £12,500, before being slashed to £3,000. During the last Labour budget, it was even rumoured that this allowance could be cut further to £500. The message from the UK government is clear. The amount of capitalism you are allowed access to is capped. First at £12,000 per year, now £3,000 per year, and possibly less in the future.
Compare this to the United States, where you can earn up to £33,050 per year in capital gains tax-free. That means someone can earn more than an average salary each year purely from capital investments and live off it, tax-free. That is a fundamentally different approach to capitalism
Even though America has become more left-leaning and more anti-capitalist over time, it still far exceeds the UK and most of Europe in its support for capital ownership. That likely explains one reason why much of America is significantly wealthier than most of Europe.
(Growth of left-leaning and socialist-identifying institutions and voters in the US
)
To push this point further, it is clear that countries without capital gains tax tend to have higher wealth levels among their citizens. There is a strong correlation between how governments treat their capitalist class and how easy it is for people to become capitalists over time.
(Countries without capital gains tax and wealth accumulation
https://taxfoundation.org/capital-gains-tax-rates-in-europe
https://www.oecd.org/tax/tax-policy/
)
On top of this, other taxes that disproportionately affect capitalists, especially young or aspiring ones, stamp duty, capital gains tax, and dividend tax among them, actively crush attempts to escape lifelong labouring. These taxes strangle the ability to earn passive income and build independence.
A broader theme emerges. Labour is glorified, while capital allocation is vilified, especially efficient capital allocation. The irony is that a population educated in capital allocation benefits the entire country. Individuals allocate their own capital more efficiently and governments are held to higher standards when allocating public capital.
More importantly, a society with a large capitalist class has more people capable of scrutinising misallocated capital and passing informed judgement on it. Your local council might stop going bankrupt due to malinvestment if its members were actually better at investing themselves. Populations without a strong capitalist class often lack the skills required to properly evaluate government spending decisions.
After 14 years of voting Conservative for a smaller state and lower taxes, many have come to the conclusion that they were betrayed and that elections no longer matter. Faced with a political system that cannot be changed at the ballot box, they have chosen to leave.
The UK is now seeing, for the first time, more than 16,500 millionaires leaving at a minimum. This matters, not just because of the headline number, but because of who is leaving and why. Up-and-coming startup founders, business owners, and entrepreneurs who aspire to become capital allocators, capitalists who create and own private property, are choosing to exit a country that no longer appears to respect private property rights. Some leave directly, others indirectly, but the result is the same: capital, talent, and long-term investment capacity are walking away.
(UK millionaire exodus data
https://www.telegraph.co.uk/business/2024/06/24/britain-millionaires-leaving-record-tax/
)
In the next part, I will explore how the UK’s attempt to align itself more closely with the European Union has influenced this direction, particularly through adopting heavy-handed regulatory approaches to capital allocation.