dealtn wrote:I got my first economics qualification 36 years ago,
That's probably your problem then. And it's an appeal to authority - which holds no more weight than the previous attempt at an excluded middle.
Claimed credentials do not bolster an argument that holds no water.
What is simple here is that a wealth tax (and other things) can damage the tax base leading to a relative decline in a country's wealth. That decline makes it harder to maintain that tax raising regime going forward. So much so that that a tax "increase" can actually over time become a "decrease".
It can't because the accounting doesn't allow that. Nor does it cause a decline in a country's wealth because that is the stuff and people that physically stays here. Particularly the people that do the actual work.
A wealth tax does nothing more than reduce some numbers on an aggregate balance sheet. Completely pointlessly as I keep saying. However since those numbers are in Sterling, the UK government can reduce them if they see fit. Based upon whatever crazy calculation scheme they fancy.
It will neither increase, nor decrease their fiscal capacity.
But people can (and do) leave, just as they arrive. The same is true of Capital.
Ultimately what makes up the wealth is Capital, Labour, and Technology progress (how those components can be combined). If Capital And Labour leave then what is left is not as much as before. It can be the same as measured in £s, they don't leave the system, it can remain as accounting balanced as you like, but in a measurement of wealth it will decline.
All the accounting does is allow the continuous matching of assets and liabilities in the units they are measured in. £s in this case. But If £=$2 or $1.5 or $1 you will have different measures of externally measured wealth.
So let's say we as a country, or government, occasionally source goods from elsewhere. Such as Defence, or Oil, or Pfizer vaccinations we need to pay for them in non-£. We can sell £s to others that are happy to buy them - buyers of our exports perhaps. But if $2 isn't the correct rate and the exchange goes to $1 each Pfizer jab is now costing us twice as much. No change in the number of £s. If we were previously selling 1 bottle of Whisky to buy a Covid jab we now have to sell 2.
We can try and become more competitive, pay our whisky workers less, make them work harder etc. But what if they decide they would rather work somewhere else, say USA. They can sell their assets, turn to $s and move to Texas, finding someone to buy their £s in the process (so that none disappear), but £1 might now only be $0.9999.
Eventually you could have 80% of the population that existed, say 10 years before. GDP per head could even be the same, but you will have a smaller economy, and if its the more productive Labour (and Capital) that goes GDP per head will fall too.
But that's ok if all you are concerned about is ensuring the same number of £s exist at all times, and that every asset has an associated liability to match with presumably.