In the boathouse, near the end of II, Michael cruelly tests Tom’s loyalty. First he asks Tom if he was going to move his family to Vegas to accept the vice presidency of “the house and hotels there.” Then he asks if Tom was going to “come along in these things I have to do”; otherwise Tom “could move his wife, his family and his mistress to Vegas.”

What if Tom, pissed off, said, “Yeah, Mike, I’ve accepted the offer of the vice presidency of the house and hotels, and I’m moving to Vegas.” Would Michael have let him go?

Great topic TB.

I will go to my grave believing, as I've posted several times, that Michael blamed Tom for the Corleones near demise: Sonny's murder, Vito's near-murder, his exile to Sicily, his involvement overall in the family business which he had previously eschewed, and, in a perverse way, his having to murder his brother.

Michael took so many opportunities to hurt Tom: "Why do you hurt me, Michael?" in that scene. Previously, "You know my lawyer, Tom Hagen." followed by "He only handles specific areas of the family business."

So, in answer to your question: yes, he would have.

In my opinion, Michael would have let Tom go....in a box!

I believe, Tom would never even dare to consider let alone tell Michael “he was moving” because Tom knows he'd be sleeping with the fishes!

Very thought provoking.

The timing is significant in that this occurred while Michael was planning on killing Fredo. Tom's "betrayal" would have been much less significant than Fredo's, but also bear in mind that Fredo was a blood brother, which Michael always seemed to distinguish. We never saw the camaraderie and closeness between Michael and Tom that we did with Michael and Fredo and Sonny. Which would make it easier to off Tom in Michael's mind. How easy would it have been to add Tom to the Roth/Pentangeli/Fredo list of hits?

Having said that, I can't quite convince myself that he would have offed Tom. Taking a new job, while not the norm, wasn't an act of betrayal anywhere near that of Fredo's or Pentangeli's. More importantly, despite the desire to kill his enemies and the hardening of his soul, Michael remained pragmatic. He was going to have his blood brother killed (albeit for reasons one could understand, if not necessarily agree with). He was going to convince his capo to commit suicide. He was going to send arguably his #2 man on a suicide mission so that Roth would die. This alone pushed the bounds of trust. Adding to this the killing of his adopted brother for such a reason would crush morale, loyalty, and cripple the family irreparably from the inside out.

So what I think would happen is this - Michael would besmirch Tom's reputation as best he could, then apply significant pressure to Tom's would-be employer to not hire him. In short, make him an offer he couldn't refuse. Rinse and repeat as necessary. Eventually, Tom would either have to return hat-in-hand back to Michael or live in the manner Fredo did post-boathouse. Isolated and watched.

There is no way Michael would have let Tom go. Tom had too much incriminating info on Michael. If he left Michael, he'd lose the lawyer/client privilege that protected him from having to testify against Michael. Tom would be fair game for law enforcement and prosecutors, who could force him to give info against Michael under threat of prosecution or contempt of court. And, if Tom was nursing a grudge against Michael because of Michael's callousness toward him, he might agree to testify as a kind of revenge. He might be signing his own death warrant, but he might take the chance in order to get back at Michael.

TB, the privilege belongs to the client and never ceases unless by court decision.

I think that it would have been easy enough to show that Tom was part of a criminal enterprise and that part would have mitigated his legal relationship with Michael.

I believe, Tom would never do anything that may harm Michael in any way
If not for Michael's sake, certainly for Vito and Sonny's sake, for what they had done for Tom, he would never harm their son / brother

As far as Michael is concerned, as soon as Tom utters the words “he was moving” [Michael wouldn't want it to get around!] Tom becomes an enemy

I think that Michael would have let Tom go, but that he only asked the question because he knew Tom wouldn't break with the family, no matter what. I think that Michael was just getting Tom on the record as a part of what was coming.