Forbes: Phil Mickelson Wins First British Open, Incurs 61% Tax Rate
Over the weekend, Phil Mickelson won the Scottish Open and the Open Championship. While winning even one PGA event is a tremendous feat, Mickelson won’t be left with much to celebrate upon his return from the U.K.
In his recent Forbes article, K. Sean Packard, CPA (Director of Tax at OFS), claims the golfer commonly referred to as “Lefty” by golf fans around the world can expect his tax liability on his earnings during the past two weeks – a total of $2,167,500 - to be a whopping 61 percent.
Without considering expenses, Mickelson will pay 61.12% taxes on his winnings, bringing his net take-home winnings to about $842,700. When expenses are considered (10% to caddy Jim “Bones” Mackay, airfare, hotel, meals, agent fees on endorsement income/bonuses—all tax deductible here and in the UK), his take-home will fall closer to 30%.
Non-resident athletes competing in the United Kingdom are also subject to being taxed on their endorsement income. It should also be noted that California does not have a foreign tax credit, thus leaving Mickelson on the hook to pay the Golden State’s top marginal income tax rate of 13.3 percent.
With an overwhelming majority of his earnings going straight to the tax collectors, will this be the last time “Lefty” competes on British soil?
More importantly, will Mickelson now look to join Tiger Woods as the latest golfer to flee the West Coast in favor of no-income-tax Florida? All indicators would point to a resounding yes.