Tax in Scotland: middle classes won't hop the border

Scotland, we still often tell ourselves, is a place to leave. And tens of thousands of people still do so every year. But more, far more, arrive to replace them.

In fact, in the devolution era there has been a steady net inflow of folk from other parts of the UK – as well as the rest of the world. Our new story is one of immigration, not emigration.

Nationalists and their proxies were out in force making this point this week. Why? Because of headlines warning of a mass exodus of the better-off to England thanks to the latest tax hikes.

Don’t worry, this is not another column on the rights and wrongs – or practicalities or impracticalities – of progressive taxation in a devolved statelet.

No, what interests me is the enduring power of emigration narratives, even after decades of record immigration.

And how fears – I suspect exaggerated – of a “mass exodus” dominated the political and media response to the budget.

We still, I think, have that strong folk memory of losing people. And opposition politicians and news editors, perhaps unsurprisingly, chose to tap in to this.

Several papers led with anecdotes of doctors or bankers hightailing it to the border to avoid tartan taxes.

And there may well be folk who feel this way. Whether there will be enough to make a meaningful dent in migration stats – or revenues – we shall have to wait and see.

The people whose job it is too predict how much money comes in to devolved coffers, the Scottish Fiscal Commission, reckon the new taxes will not raise as much as ministers hope because behaviour changes.

Read more: David Leask: 'Only fascists think Scots is a language'

Do they mean people who work in Scotland will choose to live in England? Or that people currently working here will hop the border for new opportunities? Not exactly.

There are all sorts of ways, some quite subtle, of cutting your tax bill without leaving your country or doing anything remotely unethical. Some of these are bleeding obvious.

A freelancer, for example, whose earnings are approaching a new higher band – perhaps with a punitive marginal rate – might well take their foot off the gas, or even delay sending off an invoice at the end of the financial year. An executive hitting a new tax band might opt to save more in to a pension.

So tax rises may well incentivise behaviours that reduce revenue without sparking an exodus. But we have not focused nearly as much on these little changes – potentially very important cumulatively – as on the big emotive talking point of tax exiles.

This is because we know how to talk about emigration. It is part of our remaining, albeit shrinking, repertoire of topics for news and views. And arguments about how much we should tax the rich are also well rehearsed too. Our conversations, therefore, drift back to familiar issues rather than to the nitty-gritty of more relevant ones.

We also know the very wealthy are mobile. And we often have strong views on those who leave their home countries to avoid tax.

Scotland does not have very many super-rich residents. Some of the richest Scots already choose to live beyond the reach of Scottish and UK tax.

It is perfectly feasible that a remaining Richie Rich will stomp off to Monaco – or even Manchester – in a strop. I think we can predict how that will be discussed. Because this is exactly what is happening in Norway.

Our neighbours to the east – after a long spell of right-wing government – elected a left-wing administration a couple of years back. Billionaires started upping sticks to Switzerland to escape tax. They were followed, this summer, by Alfie Haaland, the wealthy former footballer and father of national hero Erling of Manchester City. Cue claims of lack of patriotism.

Losing very high net worth residents from your tax base is serious. It is worth talking about – when it happens. But this is different to mass exodus.

This week I even saw business people say they would move to continental Europe. Maybe, like Harland’s dad and the Norwegian billionaires, they meant Switzerland. I suspect not.

Which is weird. Because running away to most of the EU to avoid high taxes would be like escaping the Scottish winter at the North Pole. British tax levels – even Scottish ones – are not high by most European standards. For example, France (even after it abandoned a mega levy on the filthy rich) has a tax burden – ballpark – of nearly half its GDP. In the UK it is – again, in back of the envelope terms – a third.

David Leask: 'Only fascists think Scots is a language'

And let us not forget the bureaucratic hurdles to emigration to the EU put up by Brexit. Or the fact most Scots lack the language or cross-cultural skills to make an easy transition to life on the continent.

And so the story, the old story, we are telling is of people leaving for England.

Social media brimmed this week with jokes about investing in property in Berwick to sell or rent to the capital’s tax-avoiding middle-classes. Hey, people can do incredibly irrational things. Maybe some white collars will be happy to spend the tax difference on schlepping up and down the east coast mainline.

I think we are telling tale tales of mass tax exiles because this is easier than grappling with the complexities of different tax regimes within the same sovereign state.

We should be thinking about how we market the country to specialists who have a choice of working in, say, Glasgow or Birmingham. What do we offer them to balance off higher taxes? Are our public services better? Our house prices lower? Grass greener? How noble, as Johnson might have said, is the prospect of the M6 to Scotland?