This past weekend, wealthy golfer Phil Mickelson took some time during a press conference to express his displeasure with the current federal and state tax codes. Like Gerard Depardieu, Mickelson finds the burden of being a multi-multimillionaire in a confiscatory socialist political system too much to bear. Here's the relevant portion of the transcript:
Q: When you're asked about Stricker's semi-retirement, with the political situation the last couple months ... what did you mean by that? Do you find it an unsettling time in a way?
Phil Mickelson: Well, it's been an interesting offseason. And I'm going to have to make some drastic changes. I'm not going to jump the gun and do it right away, but I will be making some drastic changes.
Q: Meaning leaving from California?
Mickelson: I'm not sure.
Q: Moving to Canada?
Mickelson: I'm not sure what exactly, you know, I'm going to do yet. I'll probably talk about it more in depth next week. I'm not going to jump the gun, but there are going to be some. There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state and, you know, it doesn't work for me right now. So I'm going to have to make some changes.
Q: So why do you say next week? What is going to happen so drastic next week?
Mickelson: No, but I'll probably be in the media center and I'll probably be a little more open to it because San Diego is where a lot more things, it's where I live, it's where the Padre thing was a possibility, and it's where my family is. And it just seems like a better fit than right here off of 18 on Palm Springs.
Q: Is it a stance that you are taking because on the one hand, you've made a lot of money, and no matter how much they take out, you are left with a lot of money?
Mickelson: Yeah. I'll probably go into it more next year or next week. But if you add up, 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's 62, 63 percent. So I've got to make some decisions on what I'm going to do.
These comments came on the heels of Mickelson expressing similar distaste for the amount he is taxed when he was asked about the retirement of fellow golfer Steve Stricker, which is what the reporter who asked the first question above was referencing.
According to Forbes, Mickelson raked in about $48 million last year, making him the seventh highest-paid athlete in the world. But all those taxes! We reached out to a friend who knows about these kinds of things to try and figure out just how bad we should feel for Mickelson.
Mickelson might be including property tax, sales tax, etc. into his number, so it's not a straight-forward answer.
For just his income however, the ~60% is definitely on the high side if you consider a really rough calculation on $48 million (the # used in the Forbes article) of self-employment income.
Federal taxes — $48M less state tax deduction $6.4 million and 1/2 of SE taxes = $41.6 * 39.6% = $16.1 million
State taxes — $48M * 13.3% = $6.4 million
SE taxes — 113,700*12.4% + $48M*2.9% + $48M*0.9% = $1.8 million
Like I said, a really rough calc and it puts him at a rate of about 50% ($24.3M/48M). This doesn't take into consideration the extreme likelihood that a portion of his income is taxed at capital gains rates which are much lower than 39.6% and the fact that he'll have lots of deductions to take on his self-employment income (travel, employees etc.), plus other itemized deductions like mortgage interest and charitable contributions that would push his rate lower.
There's a reason Tiger's home for tax purposes is Florida.
Hope that helps.
Huh. So, not only was Mickelson's 63 percent claim on the high side, it's also likely that he's not actually paying the full tax rate on all of his income. Regardless, the worst case scenario for Mickelson still leaves him with $24 million. Poor guy. He can't even afford to buy a share of a baseball team anymore!
Today, Mickelson issued one of those half-hearted, non-apology apologies for his comments. You can read it here, if you feel like rolling your eyes.