Is Phil Mickelson finally abandoning California for income tax-free Florida?

Tiger Woods moved from Orange County, California to Orange County, Florida. In the first year of that move, he saved $13 million in taxes. Is it worth $13 a year taken by government to live in California? Woods said no. Now it looks like Phil Michelson is about to make the same decision. He earns $60 million a year—he would save north of $5 million a year to move to a free State, like Florida or Texas.

Taxes make a difference—California population is growing due to illegal aliens. Texas, Florida and other State tax free States are growing population based on productive people moving to their communities.

“Mickelson reputedly makes roughly $60,000,000 a year in “earned income” — the highest taxed form of income.  Less than $5 million is from winning purses on the PGA tour.  Almost all the rest is from product endorsements, which is considered earned income, and the state income tax on endorsements is paid in one’s legal residence state.

For Mickelson, currently 13.3% of such income goes to the state of California. And what is little understood is that, unlike us common folk, 80% of his state income tax is NOT deductible for federal tax purposes over $2 million of income (the Pease effect).

Thank you unions and Democrats—you made the decision for the productive to move out much easier.

Floridastateseal

Is Phil Mickelson finally abandoning California for income tax-free Florida?

Richard Rider, San Diego News Room, 11/11/14

In the heat of post-election day analysis, a seemingly innocuous, unrelated article appeared in the business section of the U-T.   Wealthy California native/golfer Phil Mickelson has put his Rancho Santa Fe home up for sale for $6 million.  I don’t think the timing of this revelation is a coincidence.
http://www.utsandiego.com/news/2014/nov/04/phil-mickelson-rancho-santa-fe-pga-golf-home/

Remember the brouhaha in early 2013 when Michelson announced in passing at a press conference that he was thinking of leaving California because of the high state income taxes?  All hell broke loose — it was a PR disaster for the politically naive golfer.  He had to back down and apologize to placate his incensed, envious fans and the liberal press — and he did it with panache.

Mickelson reputedly makes roughly $60,000,000 a year in “earned income” — the highest taxed form of income.  Less than $5 million is from winning purses on the PGA tour.  Almost all the rest is from product endorsements, which is considered earned income, and the state income tax on endorsements is paid in one’s legal residence state.

For Mickelson, currently 13.3% of such income goes to the state of California. And what is little understood is that, unlike us common folk, 80% of his state income tax is NOT deductible for federal tax purposes over $2 million of income (the Pease effect).

The most important thing for Mickelson is to remain a valued endorser, which means he must remain likable by the public.  When he spoke of his tax concerns, he temporarily alienated a large segment of golfer.  He’s since largely smoothed that over.

I’ve written about this topic in a number of places.  Here’s my CITY JOURNAL article on the Mickelson affair:
http://www.city-journal.org/2013/cjc0125rr.html

I predicted after the flap that what Mickelson might do is lay low for a couple of years, and then quietly exit the Golden State for income tax-free Florida — the home for many of the PGA stars.  It seems likely (though NOT certain) that — if Mickelson can sell his home — his departure from California will follow.  So far Mickelson has refused to comment about his home being up for sale — a wise decision, I would say.  And yes — we are approaching the 2nd anniversary of his PR blunder — things are quieter now.

As you may recall, a young Tiger Woods left California for Florida just days before signing his first major endorsement — with Nike, I believe.  By doing it quietly and before Tiger was raking in the big bucks, the press totally ignored this obvious tax avoidance strategy (it didn’t hurt Tiger that he is considered black).

In a sense I’m reluctant to write this piece, as I wish Mickelson the best, and don’t want to harm his endorsement income stream.  The good news is that few liberals (or golfers!) read my stuff, so if this connect-the-dots revelation becomes a problem for Mickelson, it’s not my fault!

 

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.