It is very difficult to rewind the economy, change the starting conditions then see what happens. So we rely – like geology, cosmology, astronomy and so on – on natural experiments to build our science:
Nicola Sturgeon’s tax hurdle increases the risk of wealthier Scots emigrating across the border, the Institute for Fiscal Studies (IFS) has warned.
High earners in Scotland will be thousands of pounds worse off from income tax changes which Parliament is expected to approve on Thursday, the think tank said.
Scottish business leaders have branded the rising tax burden “a disadvantage for Scotland” and expressed concern that it will make it more difficult to compete with the UK for talent.
Under the new policy, the richest tenth of Scots will be 2.1pc poorer on average than south of the border, according to the IFS – which equates to £2,590.
Meanwhile, from the benefit increase for the poorest decile, a 4.6 per cent rise in income will mean £580 better off on average from April.
Tom Warnham, a research economist at the IFS and author of the report, said Ms Sturgeon’s government was relying on taxing high earners to fund its policies.
He said: “Especially with this group, there is a risk that higher taxes will encourage tax avoidance efforts, such as converting income into dividends – to which Scottish tax rates do not apply – or even shifting them across the border.”
So what is the movement of people – or the movement of money in dividends – going to be? Or, more importantly, what do we observe of it over time? This will be a great test of Spud’s insistence that people don’t move because of taxes, right?
No, I don’t know the answer either. This is the thing to see, see?