By Torleif Sorenson on 1/22/13
Yesterday, several news outlets and golf web sites (including ours) reported on Phil Mickelson's comments about having to significantly change his financial and residence plans in the face of a tax bill totaling roughly 63% of his earnings.
On Monday, Mickelson released a statement apologizing for his comments:
"Right now, I'm like many Americans who are trying to understand the new tax laws. I've been learning a lot over the last few months and talking with people who are trying to help me make intelligent and informed decisions. I certainly don't have a definitive plan at this time, but like everyone else I want to make decisions that are best for my future and my family.Many people, including this writer, opined that Mickelson should have just done what he needed to do and kept his mouth shut about it.
But what was not widely reported yesterday was that the massive tax increases are what forced Mickelson to withdraw from the San Diego Padres ownership group last month and to put his house up for sale. So whether politicians like it or not, Mickelson and his family are gone – as are roughly 3.4 million other residents who have left California since 1990.
The first logical destination would be the Scottsdale area; Mickelson attended Arizona State University in nearby Tempe and lived in the area for a number of years. Since Mickelson also co-owns McDowell Mountain Golf Club, he would have easy access to the course.
Mickelson is not the kind of person who goes around bragging about his income, nor his financial support of educational institutions and of people in difficult circumstances, his ExxonMobile science teacher sponsorship fund TV commercials being the exception. In fact, it was Golf Magazine writer and author Alan Shipnuck who managed to find some of Mickelson's out-of-the-spotlight contributions to other people, some of which he listed in an article posted last summer. But the skyrocketing tax rates will interfere with Mickelson's ability to make these charitable contributions (amongst other things), which may have triggered his comments over the weekend.
People can debate the results of politicians raising taxes; the U.S. Constitution has guaranteed the right to opine and assemble over this subject (and others) for over 200 years. But Mickelson has learned another lesson in this little episode:
Sometimes, discretion is the better part of valor.
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Image via Flickr, TourProGolfClubs
[ comments ]
Higher taxes forced the Mickelsons to sell their house? I don't think so.
Anyways isn't Phil like, the only PGA TOUR golfer living in California? Apparently he is just now figuring out what the other 99% of golf pros seem to have known for ages. Why live in such a high tax (and generally over-rated) state when you don't need to live there to make your living. Phil.
@beef... Last week, I would have said that maybe feeling like you are "home" is more important to Phil than money. That's how I felt. When I lived in the Chicago are, I liked it, but it just wasn't "home." After a couple years, due to other considerations, I moved back to my "home" area. I can't say 100% that I would have, if there weren't other factors involved, but it was always in my mind to eventually move back to where I grew up.
Kurt the Knife says:
waah waah waah
Personally, I saw nothing wrong with what he said. He was asked a question, and he answered honestly why he felt that way. What he earns compared to us really isn't relavant and I'm sure he gives a much greater percent of it to charity and charitable organizations than most of us.
Is there REALLY a place in the USA where there is a 60%+ tax rate? That sounds more Canadian (or Danish!). And what about W. Buffet? The interwebs (60 Minutes, etc.) would have us believe that he pays <20%. Good on Phil for getting out of the way of the gold-plated building he tried to topple on his truculent lefty self yesterday.
I commend Phil for his actions and making the best business choices for him and his family. Just moving to Florida with no state income tax would be at least a $5 to $8 million yearly savings. Why do you think that many of the current movies are no longer made in Hollywood? Strictly business (taxes).
You know what screw you Phil. The arrogance implicit in this whole "apology" is mind boggling. This "apology" is nothing more than a way of reaffirming Phil's significance in Phil's own mind. Ohhhh gee I'm sorry I wielded my enormous power and influence in a way that hurt certain people. Good lord. You know, in the normal world of people, people talk about moving, or their desire to move, all the time. It's not a taboo subject you know. But no Phil apparently thinks his opinions are so weighty and his family and personal matters so important to the world outside he's gotta grandstand as if his moving is going to shift the tectonic plates underneath California. Don't even get me started on the sliminess of then backtracking from the comments and trying to smooth over every ruffled feather. What a creep. Phil.
I don't think South Dakota has a state income tax, maybe that is where he will move. There is not that much difference in climate and culture between So.Cal. and S.D. is there? ;)
Ordinary income and investment income are taxed at different rates. Buffet's income is derived from investments, which are taxed at a lower rate than people with high ordinary income. That's one of the reasons why he looks like a hypocrite, when he calls for higher income taxes. An increase in income taxes will not change his rate.
you have to think too that he's getting heavily taxed on his "on course" winnings. isn't the tax rate on that more around 50%?
but still, if he really did pull in $45 mil last year like it was reported, is he really THAT bad off? i mean come on....
There are plenty of reasons not to move to Florida. I'm not attempting to insult Floridians, who seem to like it there. But really, if you sweat much, S.D., SoCal, or NoCal are great places to live. I hear the burritos are mighty tasty down that way too. Wink-wink.
But seriously, typically, you get some of what you pay for in terms of taxes - though not always what you want. Try living in Manhattan! You're gonna pay through the nose, but other places just don't stack up.
What I'm saying is if there are good reasons to live in a place, you'll take the hit. Otherwise, you're free to play the money-dodge game if you can afford it.
Personally I gave up a ton of income and excitement to move across the country for family reasons. I'm glad I did, and happier for it. Do I have the status symbols I once had? No, but that's perfectly fine. Mountains Gandalf, mountains!
Bernie Duffer says:
Okay! He learned, very quickly, that his rant was a mistake and issued a public apology for it. Good! I feel better about him. Unfortunately, the damage he may have done to the reputation of our game by making a statement that seemed to confirm the worst stereotypes about those who play golf, may not be so easy to repair.
The funny thing is that this was not a rant by Mickelson as much as he was just honestly answering questions from a reporter. The reporter asked him about making changes, and asked if he was moving for tax reasons. And if he wants to move to pay less in taxes, more power to him. I know I would not like to work and have someone take more than half of what I earned.
@windowsurfer and @bsta93, W. Buffet only talks about his federal effective tax rate being less than 20%, whereas Phil was adding up his federal marginal tax rate, his state marginal tax rate and a few other things.
Marginal rate means the rate at which your *last* dollar earned is taxed, so if you earn one more dollar, how much of it do you get to keep? This is quite different than the effective tax rate, which is the ratio of tax to income, effectively. I highly doubt that Phil's effective tax rate is 62-63%. Even when adding up federal, state, Social Security (or self-employment tax for independent contractors like Phil), temporary surtaxes as approved by the voters in the last CA ballot, Phil's effective tax rate is most likely much less than 50%, and that would be still quite a bit lower than the rate in many western countries... It was not a goof move by him and he realized that today, albeit a bit late.
Thx sjduffers and @bsta93. Interesting! >>> Robinson Crusoe’s father warns him about his "wandering inclination" and also counsels to be neither too rich - you will become a slave to the care of your wealth - nor too poor lest "ye work yourself to death with manual labour". Some wisdom there. In contrast to today's sports/entertainment idols (many of them clay-footed – tho I tend to see Phil as an OK guy), Yaz brought home a buck-twenty-five in 1970 and I would not be surprised if he drove a tractor on his dad's farm that winter. It's all just too much -- money, fame, wanton adulation. (In return: PEDs, adultery, arrogance and entitlement.)
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