The Phil Mickelson Effect and California: Taxed to the MAX!!!

Submitted by CA renter on January 27, 2013 - 2:27am.

Totally lame. California's taxes aren't what's making his tax burden onerous; it's the federal taxes that make up the bulk of his taxes.

He DOES have a legitimate gripe, though when hedge fund managers and others who don't work for their money (like Mitt Romney) are paying 15-20% max while he and others who **work for a living** are paying ~35% (and going higher). There is absolutely no reason to have different (and LOWER!!!) tax rates for the wealthy parasites who don't even work for their money.

The fairest tax of all is one where all types of income are taxed at the same progressive rates.

Submitted by SK in CV on January 27, 2013 - 8:29am.

He's overstated his tax rate by at least 10%. He doesn't pay anywhere near 62 or 63% as he claimed. It can't be anymore than 52%.

Submitted by spdrun on January 27, 2013 - 9:05am.

The fairest thing would be for CA to SECEDE from the US. The parasite-pigs in DC take much more money from its citizens than they give back, per capita. It goes to support pestholes like Mississippi and Oklahoma that should have been kicked out in 1861.

Submitted by Hobie on January 27, 2013 - 9:22am.

Do these golfers/football/baseball players have to obtain a city of San Diego business license and pay associated fees?

Same goes for winnings in other states. Are they subject to that state income tax plus their home state income tax?

Submitted by SK in CV on January 27, 2013 - 9:39am.

Hobie wrote:
Do these golfers/football/baseball players have to obtain a city of San Diego business license and pay associated fees?

Same goes for winnings in other states. Are they subject to that state income tax plus their home state income tax?

No license required. They do have to pay taxes to the various states in which they have earnings. But they don't pay double state taxes. If their home state has income taxes, they get credit for taxes paid to other states. Though the various state laws didn't change, states started enforcing their existing laws and collecting taxes from professional athletes that had earnings in their states in the early 80's, based on (for instance) the number of games their teams played in their states.

Submitted by meadandale on January 27, 2013 - 10:22am.

SK in CV wrote:
He's overstated his tax rate by at least 10%. He doesn't pay anywhere near 62 or 63% as he claimed. It can't be anymore than 52%.

Top Fed Rate (39.6) + Top CA Rate (12.3) + Full Fica + New surcharge (15.3 + 0.9) = 68.1%

Since he makes most of his money above the margin where these rates kick in most of his money is taxed at the full rates.

Submitted by SK in CV on January 27, 2013 - 10:38am.

meadandale wrote:
SK in CV wrote:
He's overstated his tax rate by at least 10%. He doesn't pay anywhere near 62 or 63% as he claimed. It can't be anymore than 52%.

Top Fed Rate (39.6) + Top CA Rate (12.3) + Full Fica + New surcharge (15.3 + 0.9) = 68.1%

Since he makes most of his money above the margin where these rates kick in most of his money is taxed at the full rates.

No. I was wrong on the 52%, it's closer to 55%.

FICA for 2012 was 4.2%. It's 10.4% if he's self employed. But only on the first $110K. For 2013 it's 6.2 and 12.4 respectively on the first $113,700. Mickelson is reported to have earned $48 million. So the most he could have paid in 2012 was around $11,500. In 2013 it will be about $14K. Which is less than .03% of his income.

He'll also be able to deduct 20% of CA tax, bringing his net tax down by 1%.

39.6 + 3.8% surcharge + CA tax 13.3%, FICA .03%, less value of state tax deduction of 1% = 56%. But he still gets the benefits of the lower rates on taxable income under $450K federal and $1M for CA, which would bring his net rate below 55%.

Submitted by earlyretirement on January 27, 2013 - 1:18pm.

SK in CV wrote:
meadandale wrote:
SK in CV wrote:
He's overstated his tax rate by at least 10%. He doesn't pay anywhere near 62 or 63% as he claimed. It can't be anymore than 52%.

Top Fed Rate (39.6) + Top CA Rate (12.3) + Full Fica + New surcharge (15.3 + 0.9) = 68.1%

Since he makes most of his money above the margin where these rates kick in most of his money is taxed at the full rates.

No. I was wrong on the 52%, it's closer to 55%.

FICA for 2012 was 4.2%. It's 10.4% if he's self employed. But only on the first $110K. For 2013 it's 6.2 and 12.4 respectively on the first $113,700. Mickelson is reported to have earned $48 million. So the most he could have paid in 2012 was around $11,500. In 2013 it will be about $14K. Which is less than .03% of his income.

He'll also be able to deduct 20% of CA tax, bringing his net tax down by 1%.

39.6 + 3.8% surcharge + CA tax 13.3%, FICA .03%, less value of state tax deduction of 1% = 56%. But he still gets the benefits of the lower rates on taxable income under $450K federal and $1M for CA, which would bring his net rate below 55%.

Yeah, I posted this on another forum.

http://money.cnn.com/2013/01/23/news/eco...

I'd like to see how he came up with the 63%. Me thinks Phil needs to find a new accounting firm if he really is paying 63%. Also, it's totally ironic and a bit funny that he has KPMG on his hat and sponsor.

I'm NOT saying that he doesn't pay a lot of taxes and I think it should be less but definitely I think he didn't give a realistic number which makes him look even sillier complaining about all the taxes he pays.

Submitted by Hobie on January 27, 2013 - 1:39pm.

Thx Sk. I find it interesting that some cities ( San Marino) go after service trades like landscapers,or anyone with a name on a work truck for business license fee but let the big $ get a pass.

Maybe when Mickelson say 63% taxes he is lumping in other 'fees' as well.

I do this with fees, permits, tax. Gives me a better estimate of the true cost of business. You know, 'for the privilege of doing business ..'

End snark as I'm writing out tax checks now and not happy.

Submitted by SK in CV on January 27, 2013 - 1:57pm.

Hobie wrote:
Thx Sk. I find it interesting that some cities ( San Marino) go after service trades like landscapers,or anyone with a name on a work truck for business license fee but let the big $ get a pass.

Maybe when Mickelson say 63% taxes he is lumping in other 'fees' as well.

I do this with fees, permits, tax. Gives me a better estimate of the true cost of business. You know, 'for the privilege of doing business ..'

End snark as I'm writing out tax checks now and not happy.

The thing is with those fees and permits, they're meaningful for some small businesses. $100 here, $150 there. In his original whine, Phil also included disability and unemployment. Almost every employee in CA pays SDI, it had a cap last year of $956. Employees and the self-employed don't pay unemployment insurance, employers do. but even if he's counting himself as his own employer because he's incorporated some part of his business, the most he might pay is probably $500 a year. Those little costs are annoying, and even meaningful for a small business making $50K a year, but they're not enough to make anyone leave the state.

But for Phil? If he pays them, they amount to less than .01% of his income. Not 1%. One one-hudredth of one percent. About a dollar out of every $30,000 he earns. He looks foolish even mentioning them.

Submitted by earlyretirement on January 27, 2013 - 5:09pm.

I'm NOT a fan of taxes and I agree California has way too many taxes. But this isn't the environment/climate/economy for people making $50+ million a year to complain about high taxes.

It's clear his PR team (and probably sponsors) had no clue he was going to do this and they would have NOT approved. Hence the public apology.

I don't feel sorry for the taxes Phil pays just like I don't feel sorry for all the taxes the CEO of Goldman Sachs pays each year.

Phil doesn't seem like the type that could stay over in Singapore and raise his family. Will he end up in Florida or Texas and establishing residency there? Probably. Phil is free to complain about taxes but he has to accept the flack he will take from the public.

In today's environment where there is such a sense of entitlement from people that want wealthy to support them, it's probably better to lay low and not let people know you make $50 million a year. Most people probably never imagined that Phil made this kind of money each year. And many of them have an image of him now as a spoiled wealthy guy making tens of millions a year complaining about taxes.

Again, I'm not saying he isn't right the taxes are too high in California, but he will get VERY few that feel sorry for him making the kind of money he does. Especially for being in a sport which he loves.

Submitted by sdduuuude on January 29, 2013 - 5:47pm.

earlyretirement wrote:

...

But this isn't the environment/climate/economy for people making $50+ million a year to complain about high taxes.

...

I don't feel sorry for the taxes Phil pays just like I don't feel sorry for all the taxes the CEO of Goldman Sachs pays each year.

...

In today's environment where there is such a sense of entitlement from people that want wealthy to support them, it's probably better to lay low and not let people know you make $50 million a year.

...

but he will get VERY few that feel sorry for him making the kind of money he does. Especially for being in a sport which he loves.

I don't disagree with you on these points, but the issue is not whether we sorry for a wealthy pro golfer.

The thing to ponder is that those who are on entitlement programs and want the wealthy to support them just lost a supporter.

So, either you feel sorry for him or you feel sorry for the gubmint and the gubmint cheeze recipients who stand to lose a fair bit of revenue.

And, what if more go ?
Will the poor folk be begging for them to come back?

Submitted by CA renter on January 29, 2013 - 6:30pm.

The poor folk are the ones paying for his incredibly high income.

Mind you, most entertainers don't make their money from those who worship them and buy their tickets, etc. They make most of their money from endorsements and sponsorships, etc...and that money comes from people like myself, who couldn't give a rat's a$$ about these people, but who have to pay for them whenever we buy food, drinks, insurance, cars, laundry detergent, water, milk, bread, cereal, gum, etc., etc.

Isn't this a form of "taxation" (for the benefit of the very wealthy) on those of us who have to buy these products?

Submitted by sdduuuude on January 30, 2013 - 4:19pm.

Please list 3 products you purchased from Phil's sponsors this year.

Submitted by sdduuuude on January 30, 2013 - 4:34pm.

Also consider - sponsorships are marketing expenses. If companies don't pay the sponsorship, they will spend the money on other marketing vehicles. If sponsorships are a more efficient way of marketing than other alternatives, then they have the effect of reducing the cost of the products, really.

Submitted by all on January 30, 2013 - 4:54pm.

sdduuuude wrote:
Please list 3 products you purchased from Phil's sponsors this year.

I filled up at Exon in Carmel Mountain and tool Advil this morning. That's 2/3 :)

Submitted by sdduuuude on January 30, 2013 - 4:57pm.

You must be a poor person, forced into taking Advil by "the man"

Submitted by SK in CV on January 30, 2013 - 7:10pm.

sdduuuude wrote:
Also consider - sponsorships are marketing expenses. If companies don't pay the sponsorship, they will spend the money on other marketing vehicles. If sponsorships are a more efficient way of marketing than other alternatives, then they have the effect of reducing the cost of the products, really.

That's a new one. Advertising and marketing reduces costs. I suspect there is no evidence to support that claim.

Submitted by sdduuuude on January 30, 2013 - 10:03pm.

SK in CV wrote:
sdduuuude wrote:
Also consider - sponsorships are marketing expenses. If companies don't pay the sponsorship, they will spend the money on other marketing vehicles. If sponsorships are a more efficient way of marketing than other alternatives, then they have the effect of reducing the cost of the products, really.

That's a new one. Advertising and marketing reduces costs. I suspect there is no evidence to support that claim.

A failed attempt to put words in my mouth.

I said that one form of advertising costs less than another.

Submitted by CA renter on January 30, 2013 - 10:10pm.

sdduuuude wrote:
Please list 3 products you purchased from Phil's sponsors this year.

First, this:

"Phil Mickelson

Professional golfer Phil Mickelson has struck huge endorsement deals over the years, and it is more than what he makes at golf tournaments. In 2010, Phil banked $57 million through various endorsements, such as Callaway, Rolex, and ExxonMobil, among many others. Phil was second on the Sports Illustrated Fortunate 50 list in 2011, right behind fellow golfer Tiger Woods. One reason why Phil has been so lucky in the endorsement department is his clean personal and professional life, since he is an upstanding citizen and never seems to be on the wrong size of the tabloids."

--------------

As for my purchases directly related to Phil Mickelson, Exxon would be on the list. For the PGA: Shell Oil, Farmer's Insurance, Honda, GM (cars are from a few years ago), FedEx, MasterCard, Coca-Cola products.

But it's not just Phil Mickelson, and it's not just the PGA. It's ALL of the highly-paid athletes and entertainers (though I believe those in the movie business are truly more reliant on actual box office receipts, in general). They do not get their money from people who buy tickets to see their games nor from those who pay for exclusive channels. They get the bulk of their money from consumers of everyday items -- people who may or may not watch TV or sports. Add to this the obscene executive pay and the pay of every middleman involved in sports/entertainment industries.

Instead, let's bitch about the (MUCH lower) pay of teachers, cops, firefighters, and nurses who truly are vital to our economy and quality of life.

Submitted by no_such_reality on January 31, 2013 - 9:57am.

CAR, if people didn't line up in droves to buy the cr*p, those obscenely paid athletes wouldn't get paid.

As for idiot boy, I can choose not to pay to see his events, I can choose not to watch his events, I can choose to buy his sponsors competitor's products.

That last part is the key. For sponsors like Callaway, his largest sponsor, it's as difficult as picking up the competitors clubs standing next to the sponsors clubs in the golf shop.

For Exxon, probably 50% of the time, the competitor is literally on one of the other three corners of the intersection.

To choose different cops, or teachers, or governmental bureaucracy, it's sell the house, move, change schools, uproot/close/restart your business.

Now for math. The masters has about 7 Million people watching it live. Most of them are tuning it to watch probably less than 10 of the players.

On Sunday, over 100 Million people are expected to watch the Superbowl.

Every month Oprah use to pick a book, it pretty much instantly sold a million plus copies.

That elementary teacher has 20 kids in their class.

Now if the teacher inspires every kid's parents to spend an average of $1000, they'll have $20,000 for the school.

On Sunday, if they inspire 1 in 10 viewers an average spend of $100, they'll have $10,000,000,000.

Submitted by all on January 31, 2013 - 10:09am.

sdduuuude wrote:
You must be a poor person, forced into taking Advil by "the man"

I got headache when I realized the local convenience store no longer carries Rolex. I buy Rolex for Roger Federer, but Advil for Phil.

Submitted by CA renter on February 1, 2013 - 1:30am.

no_such_reality wrote:
CAR, if people didn't line up in droves to buy the cr*p, those obscenely paid athletes wouldn't get paid.

As for idiot boy, I can choose not to pay to see his events, I can choose not to watch his events, I can choose to buy his sponsors competitor's products.

That last part is the key. For sponsors like Callaway, his largest sponsor, it's as difficult as picking up the competitors clubs standing next to the sponsors clubs in the golf shop.

For Exxon, probably 50% of the time, the competitor is literally on one of the other three corners of the intersection.

To choose different cops, or teachers, or governmental bureaucracy, it's sell the house, move, change schools, uproot/close/restart your business.

Now for math. The masters has about 7 Million people watching it live. Most of them are tuning it to watch probably less than 10 of the players.

On Sunday, over 100 Million people are expected to watch the Superbowl.

Every month Oprah use to pick a book, it pretty much instantly sold a million plus copies.

That elementary teacher has 20 kids in their class.

Now if the teacher inspires every kid's parents to spend an average of $1000, they'll have $20,000 for the school.

On Sunday, if they inspire 1 in 10 viewers an average spend of $100, they'll have $10,000,000,000.

More often than not, even the competitors' products will be from companies who advertise and who have massively overpaid executives, etc. We do not *really* have a choice, and that is the point I'm trying to make. We are forced to pay someone's bloated salary/wages/commissions because we need to buy "stuff" in order to live. Try making it through life in Southern California without a car, without gasoline, without a credit card, without soaps, shampoos, paper towels, napkins, clothing, etc. (even store brands use advertising), even cable/internet/cell phone because we are now expected to electronically submit employment applications and be available electronically for most jobs.

Whether private or public, most of us feel that we have to "overpay" somebody in order to get through life. We do not have a choice unless we build an off-grid hut in the mountains and live off the land.

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