Political Animal

Blog

January 22, 2013 10:17 AM Will Phil Mickelson Go Galt?

By Ed Kilgore

Among the sweet and sour sentiments expressed during yesterday’s Inaugural festivities, this bit of news struck a decidedly sour note:

Speaking after Sunday’s Humana Challenge, Mickelson hinted at what could be a “drastic” change for the world of golf, and himself in particular. Thanks to his substantial earnings and his residency in California, Mickelson now falls into two sets of laws that substantially increase his taxes … and he’s not pleased.
“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’s 62, 63 percent,” he said. “So I’ve got to make some decisions on what I’m going to do.”

Aside from the rather important dual facts that (a) he seems to be conflating marginal and average taxes, likes so many people do, and (b) to pay anything like the rates he’s talking about he’d have to have the most incompetent financial advisers in the world; Mickelson does put a real question on the table. Should we worry that in a progressive tax system extraordinary people will no longer feel a continued financial incentive to do extraordinary things? And if there’s any risk of that, how do we discern the difference between sheer greed (and in the case of people who become insanely rich playing games, perhaps ingratitude) and some presumed rational breaking-point where toil and trouble are no longer worth the effort?

I guess the simple answer to that is: experience will tell. If, somehow, at a time of exceptional concentration of wealth at the top, and of a “winner-take-all economy” in which the Phil Mickelsons of the world are rewarded all out of proportion to any conception of the value they add, people at the top of every occupational category start disappearing, then we’ll know it’s time to reconsider top marginal tax rates. Short of just letting the very rich set their own tax rates (which we’ve indirectly done over the years via campaign contributions and lobbying campaigns, one could argue). there’s no other way to identify optimal marginal tax rates, is there?

So we’ll see. Perhaps Phil Mickelson is just the first well-known Atlas to shrug. Or perhaps he’s an egomaniacal jerk who actually thinks gross income is an accurate measurement of personal worth. Or maybe he’s just a loudmouth who’s already chastising himself for bitching about his after-tax income when his fan-base is mostly composed of people who would accept his job for peanuts, as SBNation’s Emily Kay notes:

Boo-frickin-hoo, Phil. We’re guessing the self-serving gripes of a multimillionaire golfer ranked seventh on Forbes 2012 list of highest-paid athletes, who earned some $47.8 million in prize money and endorsements as of mid-June, won’t sit well with many of his fans who, living and toiling in the real world, can only dream about paydays like the $1.1 million he made for winning last year’s Pebble Beach National Pro-Am.

It’s tempting to say that professional sports, and quite possibly other occupations, might even benefit from greater turnover at the top, giving people who are still motivated by the joy of playing the game a chance. So maybe we can tolerate letting a few gazillionaires drift off to Galt’s Gulch to nurse their wounded pride. It might be just what our economy and society need.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • FlipYrWhig on January 22, 2013 10:26 AM:

    How can he possibly think that he pays almost two-thirds of his income in taxes? Does he have a primitive understanding of quantities, where his numbers go, like, one, two, three, many?

  • c u n d gulag on January 22, 2013 10:33 AM:

    Congratulations, Phil!

    You've lost this Liberal leftie hacker as your fan.

    Now, I hope you and Eldrick never ever come within sniffing distance of winning another golf tournament - let alone "major."

    Go ahead, go Galt, you golf-douche-bag!
    Who the feck cares?
    What an @$$hole!

  • biggerbox on January 22, 2013 10:38 AM:

    Would it be too much to ask that these rich whiners demonstrate at least basic math skills? It's an insult to those who have to do advanced bill-aging and partial-payment arbitrage between rent, food, and electric bills just to hold it together.

    Of course, people who can manage to make a minimum-wage check support them could probably also figure out that even if Phil DID pay 62%, he'd still have $18 million to live on while working at his 'job' that requires him to travel to the world's nicest locations. Boo. Hoo.

  • mad_nVT on January 22, 2013 10:39 AM:

    Yo Ed,

    I believe that there are reliable studies that show that high marginal tax rates have little effect on people's incentive for rising to the top-- and wanting to make more money. You can probably find the info somewhere in your digital world.

  • golack on January 22, 2013 10:39 AM:

    I'm not sure, but I'd guess he's considered an independent contractor, so will have to pay the employer side of payroll taxes too. For someone making below the cutoff for SS, that's substantial. But clearly that's not what is going on in his case. He's adding in payroll taxes, which is only on the first ca 190K for SS, the new health care tax of a couple of percent for income above a lot of money, plus the marginal tax rate at income above $450K, then state taxes--so that's how he got his number. Even conflating marginal tax rates with actual tax rate paid couldn't get me to 60+%, but if you add in payroll taxes, both employer and employee sides as an independent contractor would, then his numbers...are still nonsense.

  • jjm on January 22, 2013 10:41 AM:

    Well, Mickelson never seemed to be the brightest guy around. But, Ed, when you write:

    "If, somehow, at a time of exceptional concentration of wealth at the top, and of a “winner-take-all economy” in which the Phil Mickelsons of the world are rewarded all out of proportion to any conception of the value they add, people at the top of every occupational category start disappearing, then we’ll know it’s time to reconsider top marginal tax rates."

    I disagree. It simply means that 'people at the top of every occupational category' SHOULD start disappearing and give the younger people who are every bit as talented a chance. Think about how much more exciting it is to watch Keegan Bradley or Snedeker or any of the other up and comers than Mickelson, who is sometimes so far off his game that the announcers feel pity for him.

  • ComradeAnon on January 22, 2013 10:47 AM:

    Glad you used BR's article. Lord, another example that intelligence and empathy have little to do with achieving wealth. Epistemic closure at it's finest.

  • Peter C on January 22, 2013 10:55 AM:

    Going Galt is only really a threat if no one steps up to take your place. I understand how appealing it is to imagine that you are indispenable, but, in reality (with its liberal bias), few really are.

    Here's a wonderful song which says it all (from My Fair Lady):
    Eliza (singing):
    What a fool I was, what dominated fool,
    to think that you were the earth and the sky,
    What a fool I was, What an elevated fool,
    What a mutton-headed dote was I!
    No, my reverberated friend,
    you are not the beginning and the end.

    Professor Higgins (speaking):
    You impetant hussy there's not an idea in your head or a word in your mouth that I haven't put there.

    Eliza (singing):
    There'll be spring every year without you. England still will be here without you.
    There'll be fruit on the tree.
    And a shore by the sea.
    There'll be crumpets and tea without you.

    Art and music will thrive without you. Somehow Keats will survive without you.
    And there still will be rain on that plain down in Spain,
    even that will remain without you.
    I can do without you.

    You, dear friend, who taught so well,
    You can go to Hartford, Hereford and Hampshire.

    They can still rule with land without you.
    Windsor Castle will stand without you.
    And without much ado we can all muddle through without you.

    Professor Higgins:
    You brazen hussy,

    Eliza (singing):
    Wihtout pulling it the tide comes in,
    without your twirling it the Earth can spin,
    Without your pulling it, the tide comes in
    Without your twirling it, the earth can spin
    Without your pushing them, the clouds roll by,
    If they can do without you, ducky, so can I
    I shall not feel alone without you
    I can stand on my own without you
    So go back in your shell
    I can do bloody well
    Without...

    Professor Higging (singing) interupts:
    By George, I really did it,
    I did it, I did it,
    I said I'd make a woman and indeed I did,
    I knew that I could do it,
    I knew it, I knew it,
    I said I'd make a woman and succeed I did!

    (speaking)
    Eliza you are wonderful

  • zandru on January 22, 2013 10:59 AM:

    Pretty good takedown.

    Seriously, whenever some rich yahoo or "genius" CEO makes a statement like this, which reveals they know NOTHING about how the tax code works, the media AND US READERS need to provide the correct info.

    Preferably in some humorous, possibly humiliating, way. Not only ignorance, but the worship of these false "icons" needs to be discouraged. Don't get me started about CNBC, in which moron pontificators invite CEOs and their spokes in every day to lie to the viewers...

  • mathguy on January 22, 2013 11:06 AM:

    Hey Phil, you can't "go Galt" if you're not doing anything productive. Hitting a little ball into a hole doesn't qualify. Take a hike, loser.

  • Stetson Kennedy on January 22, 2013 11:07 AM:

    I love how Phil includes Social Security in there. Phil, you probably finished paying SS taxes after the first week of January!

    Smarter morons, please.

  • DRF on January 22, 2013 11:07 AM:

    Mickelson is one of the fortunate (relatively) few very wealthy people who can live anywhere in the world and still work at his trade.

    It's certainly true that he could pack up and move to Florida--which has no state income tax--and pay lower taxes as a result. Of course the state of Florida makes up for the absence of a state income tax with (a) a very high sales tax and (b) underfunding of public schools and other public services. None of that will really bother Mickelson.

    He could also, presumably, move out of the country altogether, give up his U.S. residence and citizenship. I would consider that to be an unpatriotic act; he's welcome to do it, but such an act of supreme selfishness would certainly affect his popularity.

  • Gandalf on January 22, 2013 11:08 AM:

    Poor Phil. I didn't know that wealthy sports stars were too stupid to hire good accountants. And it would be oh so hard to maintain your lifestyle on a mere 18 million a year even if you were paying the imaginary 63% tax rate.
    I used to like Phil. He seemed like a pretty nice guy but now i'll not shed a tear for any malady that befalls upon him.

  • Gandalf on January 22, 2013 11:09 AM:

    Poor Phil. I didn't know that wealthy sports stars were too stupid to hire good accountants. And it would be oh so hard to maintain your lifestyle on a mere 18 million a year even if you were paying the imaginary 63% tax rate.
    I used to like Phil. He seemed like a pretty nice guy but now i'll not shed a tear for any malady that befalls upon him.

  • Christiaan on January 22, 2013 11:19 AM:

    Actually, if big stars were going to do it for the sports rather than the money, we might get rid of the doping and other scandals. So if all you do it for is the money, than by all means please stop playing, and give a chance to people who really do it to make the sports better.

  • howard on January 22, 2013 11:21 AM:

    i don't especially follow golf, but i'm thrilled to know that i have one easy question to ask from now on: did mickelson lose? i'm suddenly revved up about golf!

    as for the broader issue: the money at the top of sports is reasonably meritocratic, in the sense that by and large, the very best players in every professional sport make the biggest dollars.

    but that doesn't mean the various sports would be worse off if suddenly the very best 1% all quit: those of us who are fans would still enjoy the games.

    meanwhile, over in corporate america, there is no direct relationship between pay and skill, other than skill at office politics. by and large, in bill buckley's old phrase, i'd rather the fortune 500 were run by the first 500 people in the phone book than by the current holders of the jobs.

  • bushworstpresidentever on January 22, 2013 11:28 AM:

    So let him quit and retire. Does he think that his endorsements will continue when he doesn't play and keep his name in the news? Besides, is he some sort of "job creator" other than for his caddie? And any prize money that he wins at tournaments will just go to another golfer. What as %^^*&*(!

  • G.Kerby on January 22, 2013 11:44 AM:

    Should we worry that in a progressive tax system extraordinary people will no longer feel a continued financial incentive to do extraordinary things?

    Yes, it's good that we had such low marginal tax rates in the 1950s and 60s, else we might not have had talented individuals develop the technology to send a man to the moon. We might not have had the numerous breakthroughs in electronics at Bell Labs, IBM, MIT, etc. We might never have had extraordinary people working on cures for now-forgotten diseases, or pioneering open-heart surgery, etc. etc.

    Oh wait, you say the top marginal rates were as high as 90% in those days? NEVER MIND.

  • DTR on January 22, 2013 12:17 PM:

    Phil is a dick, always been a self-serving dick. His career is on the wane anyway and I'm sure he's got tidy contracts with Humera for the arthritis meds that will continue whether he plays golf or not. He's already walking back his comments - doesn't want to jeopardize the Calloway contract what with his tax obligations and all. Kind of reminds me of Latrell Spreewell's comment that the 14.6M contract wasn't enough "to feed my family"

  • golack on January 22, 2013 12:23 PM:

    Actually, his game is off, so if he's looking for an excuse to quit the game and still rake in big bucks on the speaking circuit--this will kill two birds with one stone.

    Going Galt now means he won't fade away, like he would if he tried to keep playing, can avoid the Senior's tour, and have well financed right wing groups throw money at him.

    That is a smart move.

  • estamm on January 22, 2013 12:32 PM:

    So, let me get this straight, Phil. Because you might have to pay a few hundred thousand more in taxes (at most), you are willing to make tens of MILLIONS less. So, Phil, if you were in a math class, would you put a Less Than sign () between these two numbers:

    $300,000 ? $30,000,000

  • Kevin (not the famous one) on January 22, 2013 12:44 PM:

    “So I’ve got to make some decisions on what I’m going to do.”

    This coming from a guy who parties with the Never Enough crowd. I don't know Phil, are you saying I need to consider some body armor for myself.

    California won't miss you but I reasonably sure Arizona (that's the adjacent State to the east) will welcome you with open arms. There are plenty of welcoming platforms with similar blowhards, maybe you can join the chorus there. Possibly even accomplishing something.

    And thanks for the tune Peter C. ;-)

  • bdop4 on January 22, 2013 1:01 PM:

    That's right, Phil, leave the PGA and stop playing golf because, y'know, your'e IRREPLACEABLE. You're truly a job creator because the only job you create is yours and and your caddie's.

    Probably been said before but I had to say it again.

  • Joe Friday on January 22, 2013 1:06 PM:

    Like a lot of other ignorant fools, Mickelson is adding up tax BRACKETS (which nobody pays), instead of a percentage of his income.

  • bubba on January 22, 2013 1:13 PM:

    This can all be easily cleared up if Phil would simply release his full federal, state and local tax returns for, say, the past 5 years. Then we can see how bad he has it (or, more likely, how unamerican he is with offshore accounts, etc.).

    On this comment: "He could also, presumably, move out of the country altogether, give up his U.S. residence and citizenship. I would consider that to be an unpatriotic act; he's welcome to do it, but such an act of supreme selfishness would certainly affect his popularity," well, that would likely mean he could not re-enter the US to play golf, which would sap him of most of his earnings potential (he would flail on the international circuit outside the US) and likely his sponsors as a result.

  • bcamarda on January 22, 2013 1:14 PM:

    I bet they would welcome him in Russia. Maybe he could share a condo with Gérard Depardieu.

  • IEL76 on January 22, 2013 1:17 PM:

    The point is...taxes are too damned high! Period. It's not about what you make, it's about giving more money than necessary to a governmental entity that will squander it.

    Funny, when George Clooney or some other Hollywood liberal makes a left-leaning comment (a stupid left-leaning comment), everything is hunky-dory, he's just exercising his right of free speech. However, when someone advocates a conservative notion that maybe we pay too much in taxes, he's excoriated. Those people who criticize him are takers, nothing but sad, sad unproductive, worthless takers.

  • Don on January 22, 2013 1:26 PM:

    Isn't Phil's primary sponsor KPMG? Got to wonder if they really like the idea of the guy they pay a truckload of money to for wearing their hat showing such poor command of finance.

  • Andrew on January 22, 2013 1:41 PM:

    This is a pet peeve of mine. As far as incentive goes, how are the rest of us supposed to be incentivized without the big bucks. In my opinion, these people should be taxed out of existence. 90% tax on all income above POTUS, which is currently $400K. What do these people do that is of more value than POTUS and yet they make 10x, 100x more?

  • bdop4 on January 22, 2013 1:46 PM:

    IEL76,

    You must speak fluent moron, because what you call "a conservative notion" just isn't true, or can you explain how Phil pays 62% of his gross revenues in taxes?

    Oh, and please provide a link to Clooney making a "stupid left-leaning comment."

    Argue the merits or go home.

  • Tom Dibble on January 22, 2013 1:48 PM:

    Social Security is paid only on the first $113,700 of income. Most of us see that taken out of our paychecks all year long.

    At $47.8 M/year, Mickelson makes an average of $919,230.77 per WEEK. He is done paying Social Security only part way into the FIRST DAY.

    Mickelson is a moron who doesn't know:

    1. How much money he makes
    2. What he pays in taxes
    3. How little his now-much-smaller fanbase makes while watching him strut around golf courses.

    Please, go Galt. The world could use one fewer self-satisfied prima donna "entitled" two-year-old polluting our TV sets.

  • bcinaz on January 22, 2013 1:53 PM:

    I think the world would have been much better off if the whiners had all gone galt when Clinton raised taxes. We would have been rid of the Corporate welfare queens sucking profits into their platinum parachutes; cashing in while driving the economy off a cliff. They make nothing, create nothing and spend their creative energy devising schemes to separate workers from pensions and benefits and constructing a low wage utopia. The world really could have done without all those marvelous financial innovations, like subprime lending, flooding the marketplace.

  • DisgustedWithItAll on January 22, 2013 3:17 PM:

    I can't believe anybody gives a shit. Is there any more useless and wasteful activity than golf. Is there anything more boring to watch than golf. Is there anything more idiotic than the world's best shemale golfer complaining about taxes.

    Go fuck yourself, sheman golfer, boi.

  • IEL76 on January 22, 2013 3:18 PM:

    bdop4: Clooney publicly supported Obama, proof positive of a stupid liberal comment/position.

    What astounds me about morons like you, is that, I don't want anything from you, and don't care what you do so long as it doesn't directly impact me. Morons like you, however, feel entitled to whatever percentage of my wealth you deem appropriate, want to take away my light bulbs, Big Gulps ,and screw up my health care.

    The bottom line is, I'm selfish and don't give a damn about you or most of the posters on this board...I don't care if you starve to death...People need to rediscover what it means to accept personal responsibility for themselves, and hopefully in the process leave me and my family the hell alone...

  • Neutrino23 on January 22, 2013 3:29 PM:

    Don't let the door hit ya
    Where the good Lord split ya.

  • DisgustedWithItAll on January 22, 2013 3:31 PM:

    I hope that that asshole named IEL76 makes his opinions known in a larger forum than this one. As large as possible, please. Very helpful. Very helpful, indeed.

  • wvmcl on January 22, 2013 3:32 PM:

    Phil who?

    Since I couldn't care less about professional golf, somehow I suspect my life will go on pretty much the same after he goes Galt.

    I do seem to remember, though, that some of the great sports stars of the pre-1965 world, Babe Ruth springs to mind, managed to excel even though they were earning little more than a solid middle-class income.

  • Joe Friday on January 22, 2013 3:53 PM:

    IEL76,

    "The point is...taxes are too damned high! Period. It's not about what you make, it's about giving more money than necessary to a governmental entity that will squander it."

    Ah, according to the federal 'Bureau of Economic Analysis', the total tax bite (federal, state and local taxes - including income, property, sales and other taxes), is currently at the lowest level in more than SIX DECADES.

    That's where the massive federal deficits & debt arose from.

    What planet are YOU living on ?

  • bobbyd333 on January 22, 2013 5:13 PM:

    I just hope Mickelson uses the same math when he hands in his score card at the Masters.

  • Helen Bedd on January 22, 2013 6:12 PM:

    For the last 6 years [at least] around 85% of his income is from multiple endorsements [including a big auditing firm*,ExxonMobil and Barclays Bank]....money for simply being Phil. Have to wonder how many hours a year that takes.

    Some of the approximately $9 million he made playing golf in 2011 was from appearance fees. ie: money for just showing up.

    *Too bad he didn't ask that firm what percentage in taxes he's actually paying

  • MuddyLee on January 22, 2013 6:33 PM:

    Phil - there are plenty of low tax places to live. I suggest Alabama or Mississippi for starters. Maybe you aren't smart enough to live in California.

  • exlibra on January 22, 2013 10:26 PM:

    It occurs to me that Pore Pore Phil might actually have some basis for thinking that his total (federal and state) taxes are somewhere in the 62-63% range. And that his accountant has a nice, fat bank account somewhere in the Caribbeans, which he's planning to join any minute now. When a sheep strays into your yard, you shear it.

  • Hustle_hard on January 23, 2013 1:15 AM:

    You people need to understand that Phil worked his ass off to make his money and start a organization that gives millions to people that need it for many reason like cancer and other stuff. I use to hate Phil but now I respect him for what he is saying. You'll all need to get off your asses and work as hard as Phil does every single day. He has earned everything that he has worked for.

  • HMDK on January 23, 2013 9:22 AM:

    IEL76: "The bottom line is, I'm selfish and don't give a damn about you or most of the posters on this board...I don't care if you starve to death...People need to rediscover what it means to accept personal responsibility for themselves, and hopefully in the process leave me and my family the hell alone...". So if I found you starving to death I should just shit on you and your family? Your misplaced pride is more important to you than the wellbeing of your kids? Wow.