Interesting Interview with Phil Mickelson

[Puck it]

I did not relaize that the PGA had an exception to their max yearly retirement contribution.

[h=1]Phil Mickelson pondering "drastic changes" pressed by tax burden[/h]
Submitted by Scott Michaux
on Sun, 01/20/2013 - 7:23pm

By Scott Michaux


Byline2:
Sports columnist

Let's just get this right out there as is via the transcript. Phil Mickelson makes some cryptic comments after his final round in the Humana Challenge, his debut for the 2013 season. It involves his tax bracket and he plans to discuss it more (maybe) next week before teeing off at Torrey Pines.

Here's the raw copy. Judge for yourself where he's going with this.

Q. When you're asked about Stricker's semi‑retirement, with the political situation the last couple months, blah, blah, blah, 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?
PHIL MICKELSON: I'm not sure.

Q. Moving to Canada?

PHIL 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. Is that a correlation between that and what happened to the Padres?

PHIL MICKELSON: Yeah.

Q. With you?

PHIL MICKELSON: Absolutely.

Q. So why do you say next week? What is going to happen so drastic next week?

PHIL 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?

PHIL 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.

Q. How do you balance that against the TOUR's retirement plan which by all standards is the best retirement plan in sports?

PHIL MICKELSON: I don't understand. What do you mean?

Q. Well, I mean I understand the 60 percent part of the equation, but in the TOUR's plan, you guys put about as much money aside as you want. It's treated differently under tax laws than most anybody else's tax plans. Where most people can only put away $45,000 or $50,000, you guys can put as much away as you want. And so at the end you guys end up with a much larger pot of gold than most people can.

PHIL MICKELSON: But when it comes out, it's still taxed at the same 62 percent rate.

Q. Well, you're still making that kind of money. That's if you're still in that bracket.

PHIL MICKELSON: (No response.)

 

[Warp Daddy]

Hard to feel sorry for a guy who is a multi millionaire as a result of playing a game . Àw cmon Phil your endorsements from the BIG PHARMA industry alone are MORE than the average family will make in a lifetime !

 

[Puck it]

Hard to feel sorry for a guy who is a multi millionaire as a result of playing a game . Àw cmon Phil your endorsements from the BIG PHARMA industry alone are MORE than the average family will make in a lifetime !

Yes, but his taxable income is ~60% in CA. The tax base is leaving, it was bad when I lived there and workied for Intel. The CA tax rate was ~10%. I think it is 13% or more now. I do not know what the Padres thing is though.

 

[Geoff]

Yes, but his taxable income is ~60% in CA. The tax base is leaving, it was bad when I lived there and workied for Intel. The CA tax rate was ~10%. I think it is 13% or more now. I do not know what the Padres thing is though.

I presume he tried to buy the baseball team, or a partnership in the baseball team, in San Diego.

He could always move to Florida where there is no state income tax and live next door to Tiger.

He could still have a "vacation home" in California.

 

[Geoff]

I'm trying to figure out how 62% could possibly happen. Federal is 39.6%. FICA caps at $113K so that's lost in the noise when you make $10 million+ per year. He pays all of his Medicare so that's 2.9%. That's 42.5% going to the federal government. The new top bracket in California is 13.3%. That gets you to 55.8%. I'm sure he's able to shift big chunks of his income as capital gains at the 20% rate. If he moved to Florida or Texas, his effective tax rate would likely be below 40%.

 

[Puck it]

Could be the real estate tax too.

 

[Geoff]

Could be the real estate tax too.

On a modest $7 million waterfront cottage in San Diego? Impossible.

 

[mattchuck2]

Hard to feel sorry for a guy who is a multi millionaire as a result of playing a game . Àw cmon Phil your endorsements from the BIG PHARMA industry alone are MORE than the average family will make in a lifetime !

Agreed.

I read today that he apologized for his comments. I don't really know what he apologized for. If that's the way he thinks, then he's free to say it. He probably got some backlash from people who make a lot less than he makes in interest on his millions every year.

 

[Puck it]

The point is that he thinks the ~60% share that he has to pay is too much. Would you think that way too if you made that much?

 

[deadheadskier]

If I had a net worth of $180 million, I probably wouldn't care about really anything to do with money.

 

[riverc0il]

If I had a net worth of $180 million, I probably wouldn't care about really anything to do with money.

I think that is easy to say but I think all people care about money. It has less to do with the exact number and more to do with the principle that you earned it. Honestly, I think any of us would be just as interested in retaining as much of it as we could regardless of how much or how little we make. There are people that are homeless and dirt poor looking up to those of us on this forum enjoying an expensive hobby scratching their heads.

He is clearly exaggerating on his total tax liability. But if you don't like it, move to a state with less state tax or none at all. Federal tax... suck it up. All of our taxes went up on Jan 1.

 

[deadheadskier]

You can't take money with you when you die. If I was fortunate enough to amass that kind of wealth, I'd be more concerned about what ways I could use that wealth to make a difference in the world than how much my annual tax bill is. You don't hear Warren Buffet and Bill Gates bitching about taxes........

 

[riverc0il]

You can't take money with you when you die. If I was fortunate enough to amass that kind of wealth, I'd be more concerned about what ways I could use that wealth to make a difference in the world than how much my annual tax bill is. You don't hear Warren Buffet and Bill Gates bitching about taxes........

Two points... Gates and Buffet probably have mostly investment based income which gets taxed at a far lower rate than payroll taxes. Kudos to Buffet for saying "tax me more" and pointing out the issue that investment based income earners have some of the lowest tax responsibilities.

Second point... people with a lot of money may be concerned about it because they would rather give it to their family or to charity than to the government. Lots of well to do folks (such as Gates) have foundations that do good and I am DAMN SURE Bill Gates hires some very good lawyers to look after his money.

My point is that everyone of us attempts to preserve our wealth. I am sure you don't omit any deductions on your taxes just because you don't bitch. I'm fully behind progressive taxation and taxing the rich at a higher rate. But I don't think they are any different than the rest of us in doing whatever they can to reduce their tax burden in legal ways.

P.M. does seem a little bitchy here. My only thought is why is he dishing to the press about his tax liabilities. His he expecting sympathy? I don't know, don't care. But I don't think it is fair to simply say "you're rich, you shouldn't complain" because people in ALL income brackets complain about taxes and try to reduce their liability.

 

[Puck it]

Riv makes good points but you lost one thing that money that started the investment was theoretically all ready taxed a higher rate once. Investment income is a big part of a lot of people's fixed income retirement like everyone's mutual funds and stocks. Stocks are not just for rich people anymore. The other thing is one always spends to income level, thus although 50% of something large is still large. There is a lot of money still going. Also, do not forget that as income grows, deductions get reduced too.

I have two kids in college and I get to deduct nothing for the tuition as I am above the threshold for the deduction( which I think is in 90k area).

I would love to give to charities then to government. It is money better spent and I get to pick where it goes as opposed to EBT cash benefit in here in MA.

 

[drjeff]

I think the basic question in "fairness" in my mind at least is should ANYONE reguardless of their annual income and/or total networth be expected to pay more than an effective tax rate of 50%?

I strongly feel that an individual SHOULD be able to keep atleast 1/2 of what his/her talents and the market for those talents allows them to earn! If not, you're eliminating what is an incentive for many to push themselves and help advance society!

As for the whole investment income rates vs. the current progressive income tax rates. My thought has always been if someone is mad/jealous that someone else is paying a lower effective tax rate on a higher income, then they should demand that their congressional representation LOWER their rates to those of the investment income tax rates! Think about it!! Then those who are paying a higher effective rate get to keep more of what they earned (something their initial displeasure with the rate difference infers that they want) while the others continue to pay their LEGAL tax rate and keep more of what THEY earned

As for Phil's comments- great for him to speak his mind! And my hunch is that after what California did to increase the income tax rates on their wealthiest citizens, that Phil will be far from the only Californian moving to some other state with lower/no personal income taxes for their primary residence and ultimately not see nearly as much/if not even a net decrease in tax revenues compared to what they were expecting in Sacramento

Taxes when it boils down to their most basic form is a question of "who's money is it?" Yours that you earned or the governments to take from you?

 

[deadheadskier]

I strongly feel that an individual SHOULD be able to keep at least 1/2 of what his/her talents and the market for those talents allows them to earn! If not, you're eliminating what is an incentive for many to push themselves and help advance society!

You'll get no argument from me regarding that all income earners should be able to keep at least half of what they earn. Even 50% seems like way too much for the government to take, so I can see why Phil might be feeling a bit robbed. Again at a $180M nest egg, I personally wouldn't care much if I even earned another dime, but that's me, not Phil or anyone else.

Your second comment I hear many times and it's a load of crap IMO. People deposit dollars in the bank, not percentages. If your theory was true, there would've been very little advancement of society the entire last century. There were obviously periods of scorching hot economies and massive technology advancements during that time and much of it occurred when the top bracket was well north of 50%.

http://www.ntu.org/tax-basics/history-of-federal-individual-1.html

 

[Geoff]

Riv makes good points but you lost one thing that money that started the investment was theoretically all ready taxed a higher rate once. Investment income is a big part of a lot of people's fixed income retirement like everyone's mutual funds and stocks. Stocks are not just for rich people anymore. The other thing is one always spends to income level, thus although 50% of something large is still large. There is a lot of money still going. Also, do not forget that as income grows, deductions get reduced too.

The capital gains tax rate is an incredibly low 20% on rich people, not the 62% number Phil Mickelson made up while whining about taxes in California. What's your point?

 

[Geoff]

The point is that he thinks the ~60% share that he has to pay is too much. Would you think that way too if you made that much?

Mickelson is welcome to move to Mexico where there are lower tax rates and play on the Mexican golf tour.

He's a moron. He could have simply kept his mouth shut, changed his legal residence to a condo in Florida to dodge the 13% California income tax bracket, and kept living in San Diego. Since he shot his mouth off, he's either going to have to suck it up and pay the taxes to California or actually move since he's now on the radar screen of the California tax collectors. There are a ton of Silicon Valley millionaires who have legal residence in Nevada and a "vacation home" in San Francisco. When you're not making W-2 income, it's a pretty easy dodge and just about impossible to disprove.

 

[Puck it]

I am sure his income is mostly W2 reported snce it is endorsements so he is not in the capital gains. That is my point.

 

[Geoff]

Sports Illustrated says he makes about $60 million per year in endorsements and winnings. He has an estimated net worth pushing $200 million. Mitt Romney managed to show $14 million of capital gains income off of a similar net worth. So yeah, Mickelson's income is mostly taxed as regular income. Once he's paid the tax, that wealth then generates income that's taxed at a much lower rate. You seemed to be claiming otherwise.