Phil Mickelson is whining about his taxes, threatening to go Galt
Some people don’t know how to avoid sticking their feet in their mouths and today’s example is Phil Mickelson, who told the New York Times:
“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.”
So he claims he pays more than 60% of his income in taxes. I’m not an accountant, but let’s consider what it would take to get to a 60% marginal rate at any income level for some rich guy living in California named Mel Phickelson. Okay, start with the highest marginal tax rate on the federal level which will be 39.6%, add in the FICA rates of 7.65% (doubled since he is “self-employed” so he has to pay both employer and employee side), plus California’s highest marginal tax rate and you get to 13.3% additional. Add those together, you do indeed get to a number in the 60+% range.
Yet only an idiot who earns $47.8 million playing golf would actually believe that his actual tax rate would be that high. Or he has the world’s worst CPA. By my rough guess using the numbers I could find on the tax brackets for 2013 (federal) and 2012 (state), he probably will pay around 51% in taxes, although this is higher that he would actually pay if my estimates are correct since it doesn’t account for the deduction of state taxes paid for Federal taxes, not to mention the many, many creative ways the CPAs of the wealthy have of dropping the tax burden for their clients.
Yet, even that high number (which probably is far in excess of what Mickelson actually pays) disguises a lot. For example, using these unrealistically conservative estimates, he pays 35% on his first $225,000. In fact, of the estimates for his total tax bill, 98.2% of it comes from his income from dollar number $1,000,000 to dollar $48,700,000.
Basically, what this comes down to is that he has no clue, and really should go CMAFR.