Phil Mickelson and Marginal Tax Rates
Well-known professional golfer Phil Mickelson is dealing with the new reality — positioned squarely in the Top 1%, he is being asked to “do a little more” to help us through our economic crisis.
In Phil’s case, “doing a little more” translates into the following marginal tax rates, taking into account recent changes to the federal and California tax codes:
Federal income tax: 39.6%
Medicare Tax: 3.8%
California Income tax 13.3%
I don’t know about Phil’s local municipal income taxes, but probably some additional amount is being added to the 56.7% tax total above — with the result that he is pushing a 60% marginal tax burden.
After the most recent tournament on Sunday, Phil was quoted as saying that he was re-thinking his whole residential setup, in light of the tax situation. He rightly said that he was in the target zone for the increases in federal and state taxes. Its no wonder, of course, that many pro golfers live in Florida, which has no state tax, for exactly this reason. Who would not want to save that last 13.3%?
The next evening, Phil started walking the comment back, saying that “Finances and taxes are a personal matter, and I should not have made my opinions on them public.”
But of course he should. He may not want to divulge his income, but he certainly can comment on tax rates and the effect that they have on behavior — what could be a more public matter than tax rates? Do not we as citizens give our elected officials the power to set tax rates — and don’t we have the right to reverse their actions through the (very public) electoral process?
Our other alternative is to simply vote with our feet — migrate to lower tax states, for example. Its no big secret why lower taxes in Florida, Texas and (most recently) Indiana have resulted in growth in jobs and population. Tax rates do influence behavior.
So don’t back off the tax comment, Phil. You have every right to say it, and we all should be thinking about this road we’re traveling.