Thursday, January 24, 2013

Great Golfer and Humanitarian Phil Mickelson Makes a Triple Bogey on His Tax Situation

Overstates His Tax Burden and Makes Some Rookie Mistakes

This Forum really likes golfer Phil Mickelson.  He is a wonderful human being, a talented athlete and a dedicated family man.  But recently he seemed upset over the level of taxes that he is paying.

Chris Carlson/Associated Press
Phil Mickelson, who tied for 37th
 at the Humana Challenge,
 said his income tax bracket 
could lead him to “drastic changes.”

“If you add up all the federal and you look at the disability and the unemployment and theSocial Security and state, my tax rate is 62, 63 percent,” Mickelson said. “So I’ve got to make some decisions on what to do.”

But it seems to us that Mr. Mickelson has made an error on his scorecard.  Yes his federal rate is now 40%, and his stated state tax rate is about 13.3%, but state taxes are deductible from federal taxes, making the effective state rate around 9%.  So his income taxes are 49%.  Add to this self employment (what he probably calls SS tax) and a few other small items and you maybe get to 53-54%, which is high but not 62-63%.

Mr. Mickelson is right that as a self employed high earner he pays pretty high taxes.  But consider this.

Mickelson, the reigning champion at the Pebble Beach National Pro-Am, has more than $67 million in career earnings since turning professional in 1992. Last year, he was ranked by Forbes magazine as the seventh highest-paid athlete, with $47.8 million in earnings, including $43 million in endorsements.

and remember that this is what he gets for playing golf.  Admittedly he plays golf very well, but still, it’s playing golf.

So even with his high tax rate is there anyone out there who would not trade places in an instant with Phil?  Really anyone?  Is there no one who would not leap at the opportunity to make $20 million or so after tax for playing golf and shilling for a few companies?

  Didn’t think so.

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