Phil Mickelson, one of the most popular golfers on the PGA Tour and a fan favorite known as “Lefty,” was speaking his mind last week following the final round of the Humana Challenge. He did not have a particularly great tournament, finishing tied for 37th place in his first event of the year.
Mickelson opened the door for criticism when he observed that he will be paying more in taxes this year than he will take home to his family. With California’s Proposition 30 now in place, Mickelson will be subject to the new state income tax rate of 13.3 percent on his earnings of $1 million or more.
This is a 29 percent increase over California’s previous “millionaires tax.” With the state in dire financial straits, Democrats have decided that their budget problems will be solved if they can just take more from the wealthy — that is, if the wealthy will stand still long enough to have their pockets picked.
This 13.3 percent state tax is on top of the new federal tax rate of 39.6 percent for those in Michelson’s bracket. In addition, there is the new Medicare tax of 3.8 percent on incomes over $450,000, which is part of the Patient Protection and Affordable Care Act (a.k.a. Obamacare). Besides these, he will still have to pay his regular payroll and self-employment taxes.
Mickelson identified the problem by saying, “If you add up all the federal and you look at the disability and the unemployment and the Social Security and the state, my tax rate is 62, 63 percent.”
It is hard to know Mickelson’s taxable income. With exemptions and deductions and giving to charity, his effective tax rate could be less than 62 percent with taxable income perhaps in the area of $40 million.
Mickelson went on to say that “I’ve got to make some decisions on what I am going to do” and that during the offseason he would “have to make some drastic changes.” Those listening understood that he was implying moving out of California or possibly out of the United States.
Some might feel that since he earned almost $48 million last year from playing golf and from endorsements, he should be quite content to pay most of his income in taxes. He’d still have enough to get by. But how much is enough? And how much is justified?
Mickelson was criticized, and he spent the next two days apologizing for being “insensitive.” He must have seemed ungrateful to many or not sufficiently concerned about the plight of the poor. Perhaps his sponsors were concerned that his “brand” would be tarnished by his comments.
Tiger Woods came to Mickelson’s defense, indicating he saw the writing on the wall and moved from California to Florida in 1996 because of a more favorable tax climate there.
In fact, if Mickelson moved to Florida, a state with no income taxes, it would improve his bottom line by as much as $5 million to $6 million a year. That’s more than he earned playing golf in 2012.
An exodus of businesses and the wealthy has been taking place in recent years in states like California and Maryland, which look to more taxes as the solution for their budget problems. Population growth has slowed noticeably in “The Golden State” the last five years.
Look for more people to make this common-sense move. Why should they continue to support a bankrupt system where out-of-control spending has left the state’s finances in shambles?
Only in America could the rich, who already pay 71 percent of all income taxes (the top 10 percent of all taxpayers), be charged with not paying “their fair share” by those who pay absolutely nothing in income taxes. What does that say about our society?
And shockingly, the top 0.1 percent pays more than the bottom 80 percent of taxpayers combined.
Yes, Mickelson is part of the 1 percent. Too bad for him, I guess. He and anyone who supports him can expect to be criticized if they dare question whether the system makes sense or not.
George Michael’s email address is firstname.lastname@example.org.