Phil Mickelson whines about his taxes. Doesn't understand how progressive taxation works, or the difference between marginal tax rates and effective tax rates. Golfers don't have to be smart, but there's some world class stupid going on in his head.
Mickelson had suggested "drastic changes" were in store for him -- perhaps moving from his native California -- because of changes in federal and state taxes that he says tap into more than 60 percent of his income. He said it "absolutely" was a factor in deciding against becoming part of the San Diego Padres' new ownership group.
The four-time major champion didn't back away from his outlook, only his decision to talk about it...
"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," Mickelson had said. "So I've got to make some decisions on what I'm going to do."
First of all, Mickelson would only pay more than 60% in taxes if the higher rates applied to his total income. They don't. He only pays the higher federal rate on income over $400,000. His income up to that point is taxed at the lower rates. Likewise, his California taxes only increase an additional 3.3% on his income over 1 million dollars. He pays the lower rate on everything under that amount. To be sure, the bulk of his income has the higher rate applied, but that's the marginal, not the effective rate. As for social security taxes, he only pays that on his first $113,700 in income. Everything over that amount isn't taxed at all. His belief that he'll pay 62 or 63 percent of his income in taxes is simply wrong. Without knowing what he's able to claim in deductions, I wouldn't be at all surprised to learn that his total tax bite is closer to 45%, if not lower. I don't understand why so few in the SCLM ever explains the rather simple concept of progressive taxation whenever a story likes this crops up. To his credit, Len Burman has a piece up in Forbes telling Mickelson to put on his big boy pants.
...suppose Mickelson’s upper estimate on his tax bill–63%–were right. Is he saying that a $10 million endorsement deal wouldn’t be worth doing if he only got to keep $3.7 million after tax? Really? Mr. Mickelson, do you understand that the typical American would have to work about 75 years to earn that much money before tax?
Sir, you get paid astonishing amounts of money for playing golf–directly through the purses you win at tournaments and indirectly through all the endorsement deals that come with golf success. According to Forbes, you are the seventh highest paid athlete in the world, with $4.8 million in salary and winnings and $43 million in endorsements?
Do you have any idea how lucky you are?
Please stop whining and give thanks for being able to earn a fabulous living playing a game and selling golf clubs (even after tax). 99.999% of people would never have that option, no matter how hard they worked on their swing.
Mickelson made 48 million dollars last year according to Forbes. Even if he DID have to pay 60% of his income in taxes (and he doesn't) he'd still be left with $28.8 million dollars to roll around in, Scrooge MacDuck style. We should all have his "problems."
