Realizing that he had strayed too far from his cuddly image and too close to Latrell Sprewell’s anxiety about being able to feed his family on $7 million a year, Phil Mickelson apologized for complaining about tax increases feasting on his annual income of $45 to $60 million.
Within two days of airing his concerns, Mickelson said he should have kept his opinion to himself, disappointing the legions of sports fans who long to have political commentary embedded in every competition. Golf will certainly be the poorer if Mickelson does not, as promised Sunday, expound on his grievances before this weekend’s tournament at San Diego’s Torrey Pines, near his home.
So many vital questions will be left unanswered, so many teachable moments lost, if Mickelson doesn’t follow through. At the very least, he could send his accountant as a proxy to one of the tournament news conferences. Whoever does his books, or whoever told him that his tax rate would soar to 62 or 63 percent, has a lot of explaining to do.
Among the leading questions that may now remain mysteries forever are:
1. Does he realize that when Jack Nicklaus began his pro career in 1961, the top federal income tax rate was 91 percent on compensation over $200,000 a year (roughly $1.5 million in today’s cash, after inflation adjustment)? Somehow, the man decided to take the huge risk that he might become a rich athlete and have to pay those taxes.
Mickelson’s peak federal income tax rate will rise 4.6 percentage points this year, to 39.6 percent for every dollar he makes over $450,000. That increase plus a three percentage point rise in his California state taxes, he said, would force him to make “drastic changes’’ in his life and career. He could have meant anything, including winning more often to pocket more cash.
2. For someone who earns an eight-figure salary, what feels like a drastic change? Moving states, or cutting off the air conditioner when you leave the house? Do-it-yourself haircuts? Pushing the children to excel in a sport so they can go to college on an athletic scholarship, just like their Dad did at Arizona State?
3. When was the last time Tiger Woods felt Phil’s pain? He defended Mickelson on Tuesday, and reminded people that he had moved from California to Florida for tax purposes in 1996, right after turning pro.
4. Mickelson cited “disability and the unemployment and the Social Security’’ as part of his increasingly overwhelming tax burden, raising these three questions:
- Mandatory disability insurance premiums in California max out at $1,008 this year for high-income workers, an increase of $53 over 2012. How many of the drastic changes will be dictated by a $53 reduction in take-home pay?
- Unemployment taxes are paid by employers, not by the self-employed. They top out at $434 per person annually in California. Did Mickelson mean he had staff to cover?
- The Social Security self-employment tax is 12.4 percent, but it applies only to the first $113,000 in wages. Does Mickelson realize his sponsorship income probably hits that level by the time he reaches the second green of his first tournament every year?
5. How did he reach a figure of 62 to 63 percent? A calculation of his personal taxes, with all of the new increases, hits 57.9 percent at the most, before deductions. If he doesn’t have enough deductions and shelters to lower the figure quite a bit, who are his accountants? His sponsors at KPMG may not want him to answer that question.
6. Does he realize that a single self-employed California wage earner making $113,000 a year will have a pre-deduction, unadjusted tax burden of about 48 percent in 2013? He or she would not make a dime untouched by Social Security taxes. On an income of $50 million, Mickelson would make $49,887,000 unscathed by that tax.
In addition, as a married person with a stay-at-home spouse, he stands to receive a 50 percent bump in Social Security benefits without paying an extra dime in taxes for it. The single worker, if he or she stays single, will have to subsidize that amount. Does Mickelson really think only he and other millionaires are “in the zone targeted’’ by the tax collectors? Everyone has a potential complaint. Not everyone has the option of moving to another state.
7. Did he include property taxes in his assessment, and if so, did he remember that he decided how much real estate to buy? For that matter, did he consider renting? He’d have to forgo all sorts of benefits and shelters attached to homeownership, and he’d still be paying property taxes indirectly. But he could feel like a whole different kind of victim then.
8. Why didn’t he make his point during the election cycle? If you’re going to become a class warrior, why do it after your biggest battle has been lost? Say this for him: He didn’t play the issue like a political animal. He stumbled into it, becoming a hazard only to himself.
Mickelson should have just pulled up stakes, headed for Florida and not said a word about why. He could have laid up. Instead, he pointlessly pulled out driver on an approach shot and hit into a trap on the next hole. The moaning about taxes didn’t fit his persona, but it definitely matched his game.