How would you feel if your taxes went up by $5 million over night?
Well that’s what happened to pro golfer Phil Mickelson, who recently made headlines for commenting on the absurdly high tax rate he faces as a successful citizen living in California. Mickelson stated: “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 is 62, 63 percent, so I've got to make some decisions on what I'm going to do.''
Mickelson has earned over $60 million per year roughly for the last few years – not too shabby. As a result of Gov. Jerry Brown’s recent Prop. 30 income tax hike, Mickelson’s state income tax burden jumped from $6.18 million to $7.98 million- a whopping $1.8 million increase!
The Golden State’s income tax hike only added insult to injury for Mickelson this year, who also got hit with a $3.28 million federal income tax hike as a result of the post-fiscal cliff top federal tax rate jumping to 39.6% (plus pay roll tax increase=42%).
Just focusing on Phil’s income tax bite, assuming he continues to earn $60 million per year and stays in California, here is how his tax bill will grow in the post-fiscal cliff, post-Prop. 30 world:
Federal Tax Burden:
Pre Fiscal Cliff Federal Tax Burden (36%)
Post-Fiscal Cliff Federal Tax Burden (42%)
State Tax Burden:
California State Burden Pre-Prop 30 Tax Hike (10.3%)
California State Burden Post-Prop 30 Tax Hike (13.3%)
The majority of players on the PGA tour live in either Florida or Texas, two states that do not have an income tax. State taxes matter a great deal. Neighboring Nevada has no income tax and I’m sure it’s not lost on Mickelson that he can save over $7 million per year by simply moving to the other side of Lake Tahoe.