Phil Mickelson, poster boy for the oppressed rich! He’s upset about his tax rate. He says — can this be true? — that when you add federal and state and various other taxes together he’s got a tax rate of 62 or 63 percent. He’s threatening “drastic changes” — he won’t say what that means — but we can only assume he’s pondering leaving his home state of California (13.3 percent tax rate on income over $1 million). “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,” Mickelson said, according to Yahoo Sports.
Maybe he’ll move to Russia, like Gerard Depardieu.
I’m a big Phil fan, so I don’t want to say anything snarky about him. But our compassion is tempered by our knowledge that, as a professional golfer, he has not spent his life in the salt mines. He doesn’t break rocks for a living. His working life looks to most of us remarkably like “playing.”
Compared to most other professional athletes, the fellows of the PGA Tour have it made. They don’t get concussions and wind up mentally impaired. They don’t play for a few years, basking in glory, and spend the rest of their lives trying to do something anywhere near as rewarding. They don’t labor in obscure sports that can’t elbow their way on television (such as, to pick a sport at random, women’s golf). There’s even a Senior Tour. Male professional golfers can play until they can barely walk. And as a Masters champion, Phil will be able to play at Augusta National until he can no longer bend over to tee up the ball.
Phil has spent his entire life thinking that a “wedge issue” refers to a situation when you’re in a sand trap. This is a guy who, when he hears the term “moral hazard,” remembers how he foolishly hit driver off the tee when he had a lead on the 72nd hole of the U.S. Open at Winged Foot.
Money? The other day Brian Gay (yes, THE Brian Gay) won the Humana Challenge (THE Humana Challenge) and was rewarded with a winner’s check of $1,008,000. I don’t mind the million dollar prize, but the extra $8,000 strikes me as over-the-top.
What should a rich, famous, successful golfer who, according to the Golf Channel, makes $47 million a year when you add in the endorsement income, pay in taxes? Sure, I’d say that 62 or 63 percent is too high — and if Phil is really paying that much in taxes he needs to ditch the Turbo Tax and hire an accountant. The Golf Channel has reported this out, saying that Phil’s marginal rate is more likely to be 53 percent:
“On Nov. 6, California voters approved Proposition 30, which retroactively increased state tax rates on income earned over $1 million from 9.3 percent to 13.3 percent, and the federal fiscal cliff deal raised the income tax rate to 39.6 percent. Mickelson would also pay 1.2 percent in phased-out itemized deductions and 3.8 percent in Medicare taxes.
All total, that is 57.9 percent of Mickelson’s income, but state income taxes and a portion of the payroll tax are deductible from his federal tax bill, which would reduce his total taxes by about 5 percent and lower his total taxes to about 53 percent, not 62 or 63 percent.”
Phil’s problem, of course, is that he earns this money, and “earned income” is taxed at a higher rate than capital gains. (Phil, call Mitt.) He needs to retire, sock his money away in various investments, and watch his tax rate drop dramatically. (And thinking very long term, he can ponder the recent change in the estate tax that was part of the fiscal cliff deal.)
As someone who makes most of his money in endorsements, Mickelson probably figured out very quickly that he shouldn’t have started whining about his tax rate. That’s why he apologized and vowed to stay out of that particular patch of rough. Maybe his agent called him. Maybe one of his sponsors. Maybe his accountant. But Phil got the message.
Which is: Play on. Life as a golfer is pretty darn good. Particularly if you’re a great golfer, surpassed by only one other in the last two decades. In fact, if you had to say who is the one person in America who you feel least sorry for, it might very well be Phil Mickelson.
Thursday morning update: This is why I like Phil – he not only apologized again for talking about his personal tax worries, he compared the situation to his aforementioned blunder at Winged Foot.
“This reminds me a lot of Winged Foot in 2006, where I hit a drive way left off the tents,” Mickelson said, according to ESPN.com. “So this happened to be way right, but way off the tents.”