Winning At a Cost
By mustang6560 on 7/25/13
Between the Scottish Open and the Open Championship, Phil Mickelson won £1,445,000 (or $2,167,500) during his recent golf trip to Scotland.
But by the time Lefty boarded Air Force Phil to return home, his earnings were reduced to £636,069 (or $954,000).
The United Kingdom, which has authority to set Scotland's tax rate until 2016, graduates to a 40% tax rate when income hits £32,010 then 45% when it reaches £150,000. Mickelson will pay £636,069 ($954,000, or 44.02%) on his Scottish earnings.And before his flight landed in his native California, his income was reduced by another 13.3%.
The good news for Mickelson is that he can take a foreign tax credit on his US return so he is not double-taxed at the federal level on this income. The bad news is that the credit does not cover self-employment taxes (2.9%) or the new Medicare surtax (0.9%). Additionally, California does not have a foreign tax credit so he will have to fork out 13.3% there as well. Although he receives federal deductions for his California tax and half of his self-employment tax, these deductions do not benefit him on this income because as they reduce his federal tax they reduce his foreign tax credit.If you factor in his expenses for the two weeks and his caddie fee (10% to Bones), his take-home pay was approximately 30% of his gross pay, £433,500 (or $650,250), according to the article. The only reason K. Sean Packard felt the need to write this guest post for Forbes.com is because Phil complained about his first world-iest of first world problems last January — paying million in taxes.
All I'll say is I'd love to have Phil's problem.
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Image via Flickr, J. Campbell
[ comments ]
Most of the oobers have income problem.
Phil on the other hand, has a tax problem.
joe jones says:
When Sam Snead went to the Open it cost him $3600 to go and he won $2400. It,s not all about the money. Would you prefer that none of the Americans go . I think not. Phil is entrenched in California. Otherwise he would move to Arizona.
@joe jones you miss the point, taking that much taxes out of anyones paycheck regardless of the work is highway robbery... I don't work hard so I can fund someone else's life... I am not against all taxes but geez this robbing someone in pure daylight.
Does he have to pay any taxes to the US for that income?
Yes he does federal and the highest or one of the highest in the country in Cali.
The US is the only country that does that. oh, and Eritrea. If he was a citizen of another country, he wouldn't have to pay taxes in both countries. If you're a US citizen living abroad and make over $96k USD, you have to pay US taxes as well as taxes in the country you're living in. It's a pain in the ***.
Someone has to pay taxes, everyone can't be on welfare.
U.S.National parks have signs saying "Do not feed the animals, It makes them dependent."
Yet the U.S. Government does the exact same thing with it's people, creating a dependent class of people.
long live the queen and the princes, they have to earn a living off of somebody
Matt McGee says:
I guess people in the UK aren't afforded the luxury of avoiding taxes the way people in the US are. Higher income means higher tax. If a country is governed for the benefit of the majority of its population, that's the way it works.
Ever wonder what KPMG represents on his hat?
It's one of the four largest accounting firms in the world. He probably gets good tax advice.
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