California Will Slam Mickelson with Hefty Tax Bill After Open Win
Earlier this year, Phil Mickelson suggested that he may have to move out of California because of the state's confiscatory tax rate. He later was pressured to walk back some of his remarks, but after winning the Open Championship on Sunday--and earning $1.43 million--Mickelson may have to reassess his options.
Mickelson backed off after complaining about the California state tax rate being raised to 13.3 percent for those earning over $1 million, which occurred when voters approved of Proposition 30 in November of 2012. ESPN reported regularly that Texas's zero percent state income tax rate, for example, may have had a role in pushing Dwight Howard to ultimately sign with the Houston Rockets (see Breitbart Sports' table of state taxes before California’s hike). Forbes Magazine is now reminding Mickelson that California will benefit greatly from Mickelson’s British Open win Sunday. Tiger Woods is another athlete who has publicly said he moved out of California, where he was born and raised, because of the state's high tax rate.
One report suggests Mickelson may pay over 60 percent of his $1.43 million out in taxes to the UK, IRS and California. As Breitbart Sports reported, athletes are taxed based on where they earn the money (away games go to the state in which a game was played, etc.), but whether California collects their 13.3 percent of the $1.43 million since Mickelson decided not to leave the state is small change compared to what California may get from him after the win in Scotland.
Forbes points out the that the bigger impact of Mickelson’s win will be in extending and potentially even expanding the $36 million a year he gets from endorsements from companies such as KPMG, Barclays, and Callaway. If the British Open win increases his sponsorship by just $2 million, California would receive $5 million in state taxes from him.
The $5 million tax payoff the state of California could receive from Mickelson almost matches the $5.8 million the state could continue to keep after Sacramento Mayor Kevin Johnson was able to stop the Kings from moving to Washington, where the players would have kept the $5.8 million a year even under their relatively low $44 million team salary.