TOM Gordon that tax rises agreed at Parliament on Tuesday “could lead people to quit the country and reduce revenues” ("Warning top earners could leave as tax rises are backed", The Herald, February 20). According to the Chartered Institute of Taxation (CIOT), those liable to higher rates of taxation “could cut their work hours, divert more income into pensions, incorporate as businesses, or simply leave Scotland to save money”.

This view depends on the beguiling, but simple, view that if one’s tax liability is greater in jurisdiction A than jurisdiction B, those in A will move to B. The first three suggestions – cutting hours, increasing pension contributions or business incorporation – are not possible even for all high earners, but moving from one job to another is open to everyone. Therefore, we have to ask whether there are there jobs in jurisdiction B? An argument based on differing tax rates is sound only if there is a real choice for people to move. Honda has announced the closure of its Swindon plant. The Toyota plant at Derby is under threat. Sony and Panasonic are moving their HQs out of the UK. And Brexit hasn’t started yet.

But, even if there is alternative work, is it as simple as the loss of £1,500 per annum? What if there is no alternative work for one’s partner? What about family and social connections and commitments? Will people uproot their children from their friends and education? And then there is the cost of the move – buying and selling houses, as well as the cost of the move itself? For £1,500 pa?

Cristobal Young, using the tax returns of top-earning individuals in the US shows that that “place still matters for the rich – much more so than we might think”. Indeed, it is lower earners who are generally more likely to move. Nor do the wealthy necessarily move for tax reasons. Professor Young found that while 15 per cent of the moves by wealthy tax payers brought a financial advantage, 85 per cent did not. And quality of life clearly matters, as while Florida has a low tax regime, it has its own other advantages not enjoyed by other low-tax states such as Texas, Tennessee and Nevada who, unlike Florida, pick up only a little net tax migration.

The implications of all this for Scotland are, I think, clear. The kind of changes suggested by CIOT are possible for some, but for how many? Even among those who can make such changes, how many will actually go to the trouble of doing so? How many will actually move? The situation was summarised by Sarah Coles, personal finance analyst at Hargreaves Lansdown, who said: “In practical terms, however, for the vast majority of people, the tax differences [between Scotland and the rest of the UK] are marginal, and they are vastly outweighed by the hassle and expense of moving around. You are also at the mercy of changing policy.”

However interesting an argument based on tax rates is, it is too simple, on its own, to capture the complex reality.

Alasdair Galloway,

14 Silverton Avenue, Dumbarton.

I AM somewhat amazed by the perceived impact of Finance Secretary Derek Mackay’s “progressive” tax budget. As a Scottish taxpayer, I have no problem in paying more tax in Scotland provided that the additional revenue generated is spent in Scotland. But that’s the problem, you see.

Many higher rate taxpayers, myself included, own their own companies and choose to take a small salary augmented by company dividends, why? Because it’s more tax-efficient as well as legal. Other taxpayers may have significant property income which brings them into the higher rate of tax. So what, I hear you say?

The Scottish Government has control over income taxes collected on wages and salaries, but not on dividends, property income and capital gains tax to name just a few. So the extra tax to be paid by a higher rate taxpayer in my situation will be payable on income where the tax goes to Westminster, not Scotland.

This is certainly not progressive and defies common sense. There’s no point in tinkering with Scottish tax rates unless you have control of the whole lever, not just a bit of the handle. Will Westminster give Scotland any of the extra tax generated by this wheeze, including my £1,500? Don’t hold your breath.

John Murphy,

John Murphy & Company (Scotland) Limited, Castle Chambers, 67 Main Street, Bothwell.