For golf legend Phil Mickelson, the low 60s makes for a great score on the links — and a lousy tax rate in his home state of California.
Mickelson said “drastic changes” are ahead for him due to federal and California state tax increases that have pushed his tax rate to what he figures adds up to “62, 63 percent.” The left-hander will talk more about his plans — possibly moving out of California or even retiring altogether — before his hometown Farmers Insurance Open, the San Diego-area event that begins Thursday at Torrey Pines.
“It’s been an interesting off-season,” Mickelson, 42, said Sunday after the final round of the Humana Challenge. “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.”
Mickelson, who lives in Rancho Santa Fe, is unsure exactly what he’ll do, but changes will come, he said. “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,” he said. “So I’m going to have to make some changes.”
California voters in November approved Proposition 30, which, in addition to raising the state sales tax, carries a menu of new tax brackets that hit millionaires like Mickelson hard. For income exceeding $1 million, the state rate jumped to 13.3 percent from 10.3 percent. For Mickelson, who earned roughly $60 million in 2012, that would be a tax increase of more than $1.8 million.
“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,” Mickelson said. “So I’ve got to make some decisions on what I’m going to do.”
Mickelson, who flirted with becoming part owner of the San Diego Padres last year, said there was “absolutely” a correlation between the tax increases and the eventual failure to grab a piece of the Padres franchise, which ultimately sold for $800 million in August.
Mickelson, whose net worth is conservatively reported at more than $150 million, finished with a 66 on Sunday to tie for 37th at 17 under in his season debut. The Hall of Famer — nicknamed “Lefty” for his big left-handed swing — has 40 PGA Tour victories, including four majors, and his career earnings exceed $67 million, according to PGA statistics.
Mickelson, according to Sports Illustrated, was the second-highest earning athlete of 2012, second only to boxing’s Floyd Mayweather, Jr. Mickelson, who was also second on the list in 2011, earned $3.7 million in winnings and $57 million in endorsements last year — for a staggering total of $60,763,488.
Details of Mickelson’s several endorsement deals — including partnerships with Callaway, Barclays and Rolex to name a few — are unknown, and his real estate holdings and other business ventures are not included in the Sports Illustrated tally.
Mayweather, by comparison, earned $85 million last year during just two fights and without any endorsement deals.
http://www.foxnews.com/sports/2013/01/21/golfer-phil-mickelson-plans-drastic-changes-over-new-tax-rate/
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Phil has been trying to sell a second home in RSF. The original asking price was $15 million in 2007, and when the listing expired last week, it was down to $7,095,000.
Here is a tour: http://youtu.be/glZTTDX7O7I
I wonder what the “99%” are going to do when the “1%” pick up stakes and move to places more financially friendly.
America wasn’t based on financial equality for all. It was based on the guarantee of personal liberty and freedom. Russia was based on financial equality for all and we know how that ended up.
It really made me sad to see that Michelson specifically noted taxes as a reason to not become a Padres owner. Maybe when California has chased out all the big businesses and there’s nobody left to tax they’ll start incentivizing them to return and we’ll see people like Phil come back.
It’s not a crime to be successful and business owners should never feel shameful for the success they’ve earned. (through lawful means)
Let’s see what Phil’s wife says about moving from California…..
Maybe Phil should ask Mitt how it gets away with a tax rate of between 0-12%
They simply have to establish legal primary residence else where without really moving out of CA, don’t they? I heard many well to do have done that with primary residence in Las Vegas while keeping living quarter in CA.
A lot of pro golfers establish primary residence in FL, TX and Nevada. But who know exactly how they spend their time?
Totally disingenuous. Zero chance he pays more than a combined 30ish percent total combined state and fed taxes after deductions.
That said, it’s surprising he doesn’t claim FL as his primary rez like the rest.
With all the tax increases we’ll be at around 50% effective tax rate. We have a high income, but we are just employees, so there aren’t too many ways to “hide” that income. Work is here and we have kids in school, so we can’t just move to a more tax friendly state.
Phil is an SD guy, USD High grad, family is here, got 3 kids in school here, etc. Like Jim says, let’s see if he can get Amy and the kids out of here (or if he even really plans to try…)
To rebut what I feel might be a common misconception, I don’t know many wealthy people that are leaving California due to taxes. The successful people I know are established here, networked in here with contacts and they are not going to Texas to start over. I think some guys up at Stanford did a pretty in-depth analysis of CA migration stats and we simply are not losing lots of wealthy people.
dacounselor,
That was what I thought before. The wealthy ones who set up primary in Las Vegas will not tell you this unless when they get drunk:-) They appear to be living here normally just like you and me.
Obviously Phil’s being a bit ingenious with his stats, but there’s a point. Most of Phil’s pay is actual income so in CA most of his income with be taxed at 12.3%. Most of his federal will be taxed at 39.6% which adds up to 51.9%. Medicare adds another 3.8% because he’s high income. He shouldn’t even mention SS because 99+% isn’t subject to SS. He pays 12.4% on the first $100K or so but that’s it.
But all in all he’s looking at a tax rate around 60% because he’s actively “working”. If he wasn’t then he could live well on passive income and pay lower taxes.
Just one day after Phil Mickelson sent the golf world into a frenzy over his statements about tax laws, he released a statement late Monday night clarifying things:
And with the first question at Tuesday’s Farmers Insurance Open we have what is known in the media world as “a feeding frenzy.”
George – take a look at the 2012 Stanford report on millionaire migration (or lack thereof) in California. It’s a good read on the subject. Conclusion is higher taxes do not cause out-migration and there has been no real out-migration in CA. One very salient point is that people who are killing it financially are not very apt to pack up and leave.
The Stanford study would appear to be supported by the fact that CA continues to be ranked near the top nationally in millionaries per capita. Nevada, Texas and Florida do not rank at the top, interestingly.
Regarding those setting up a primary residence in NV but actually living in CA – those people are captured in the Stanford study as having out-migrated because the study is based in part on tax filings that show where the taxpayer resides.
The only hard-data studies I have seen indicate no net out-migration of the wealthy and a continuing large % of millionaires residing in CA. I would be interested to see an opposing data-based study but I just haven’t seen one.
And as a gambling man my bet is Phil & Family ain’t going anywhere.
We had a friend (he passed away 2 years ago) that was very wealthy and had residency in Florida. He spent summers at his second home in Santa Barbara (Montecito). He could be a crazy and reckless guy, but he made sure not to spend a minute over 90 days in CA, so that it would not trigger any CA taxes.
How do the people mentioned in above posts get away with residency in another state, but continue to spend most of their time in CA?
I read in today’s (1/23) Long Beach Press Telegram that Phil made approx $47.8 million in 2012. $43 million which came from endorsements. At Lefty’s reported 62% tax bill, that leaves him a measly $18.2 million to live on. How is he supposed to make ends meet? I would suggest he fire up the private jet and head to Florida a la Tiger.
Judging by most of the comments here, verily tis the age of envy and class war. I expect that from the NorCal bubble sites, but it’s kind of depressing to see it in San Diego. Oh well.