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View Diary: Oh Noes!!--Phil Mickelson (R-Golf) Might Retire, Citing (Incorrectly) Tax Hikes on Top 1%--Boo-hoo. (302 comments)

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  •  Ian - CA income taxes went from 10.3% to 13.3% (4+ / 0-)

    In the most recent Nov election CA passed Prop 30 which moved the top income tax rate to 13.3% tops in the US. The second highest is 11%.

    It makes no sense for Michelson to keep his residence, for tax purposes, in California when he could live in Florida, or several other states, that have income tax rates of zero. That's why you see so many professional athletes live in Florida, it has no state income tax.

    Michelson can still keep his California property, and low property tax, but he would have to live outside of CA for more than half the year. Given his travel schedule that won't be hard.

    "let's talk about that"

    by VClib on Mon Jan 21, 2013 at 07:57:20 AM PST

    [ Parent ]

    •  Income is still taxed on location earned (3+ / 0-)
      Recommended by:
      TFinSF, Ian Reifowitz, bobinson

      Lebron James has to pay CA taxes on income earned when the Heat plays in LA, Sacramento or Oakland. NY taxes when he plays in NYC, etc.

      When you are right you cannot be too radical; when you are wrong, you cannot be too conservative. --Martin Luther King Jr.

      by Egalitare on Mon Jan 21, 2013 at 08:14:52 AM PST

      [ Parent ]

      •  That's true but all the endorsement income (1+ / 0-)
        Recommended by:
        Ian Reifowitz

        is taxed at your state of residence. It makes no sense for Phil to live in California and pay 13.3% when he could pay zero.

        "let's talk about that"

        by VClib on Mon Jan 21, 2013 at 08:20:11 AM PST

        [ Parent ]

        •  It makes no sense to a greedy, self-absorbed (3+ / 0-)
          Recommended by:
          Ian Reifowitz, sukeyna, tobendaro

          piece of shit like Mickelson, that is.

          For an actual, you know, human being, making fifty million bucks a year is plenty; hell, he could live fine if his total tax rate were 98%, which if course it isn't.

          But yeah, sure, for greedy pigs the only reason for making any decisions about things like residence is the avoidance of contributing to society. So I suppose it makes sense to an asshole to move to Florida for that reason.

          "Bernie Madoff's mistake was stealing from the rich. If he'd stolen from the poor he'd have a cabinet position." -OPOL

          by blue in NC on Mon Jan 21, 2013 at 08:44:45 AM PST

          [ Parent ]

        •  It makes no sense if citizenship is reduced to... (5+ / 0-)

          ... "What's in it for me" and nothing else.

          When you are right you cannot be too radical; when you are wrong, you cannot be too conservative. --Martin Luther King Jr.

          by Egalitare on Mon Jan 21, 2013 at 09:22:10 AM PST

          [ Parent ]

          •  A high percentage of professional athletes (2+ / 0-)
            Recommended by:
            dewtx, nextstep

            particularly those with large amounts of endorsement income live in Florida or Nevada. It's easy to understand why high income athletes would live in states with no income tax. In Phil's case he is paying $4-5 million a year in state income tax when that number could be zero if he lived in Florida. I am sure he receives a lot of pressure from his tax advisers to more his tax residence to a no income tax state.

            "let's talk about that"

            by VClib on Mon Jan 21, 2013 at 09:56:40 AM PST

            [ Parent ]

    •  Again the research I cited shows that (3+ / 0-)

      states lose little to nothing from high tax payers fleeing. See the post.

      •  Ian - I am sure the states are net possitive (2+ / 0-)
        Recommended by:
        Ian Reifowitz, valion

        on revenue, but I your research is dated and I think we are about to see an acceleration here in CA as high income boomers retire. If have very high income and don't need to be in CA to work, it makes economic sense to have your tax residence in a no income tax state. If you have annual income of more than $1 million you can buy a home in Nevada, keep your CA property, and pay for the Nevada home just on your tax savings. We are seeing an acceleration of higher income tax payers leaving CA, particularly as they reach retirement age, and moving to no, or low, income tax states. In CA we have, for budget purposes, an over reliance on high income earners for a high percentage of the state's total revenue. This makes our cycles more challenging because high income earners have more variable income that tends to track with economic cycles. Over the longer terms as our population loses high income, high tax paying residents, if they aren't replaced it will impact the state budget in a negative fashion.

        "let's talk about that"

        by VClib on Mon Jan 21, 2013 at 08:46:30 AM PST

        [ Parent ]

        •  We'll see, but I doubt it. (2+ / 0-)
          Recommended by:
          VClib, sukeyna

          3% extra, and only for 7 years. If 10% didn't make him move, 13% won't either.

          •  Ian - I think it will be very interesting to watch (0+ / 0-)

            At the margin what is enough to make people think about moving, which is never easy. Even at 10.3% for high income earners it caused a lot of discussion as people approached retirement. My guess is that the increase to 13.3% will accelerate an existing trend.

            Even for people at much more modest incomes state taxes did impact decisions. My next door neighbors, who ran a very successful market research business from their home, sold and moved to the State of Washington. Their children were grown, none of the children lived in California (or Washington) and they were paying 9.3% state income tax. In Washington they pay zero state income tax, which makes another $20-30K available each year to put into their retirement program.

            I do think at the margin state income taxes impact decisions and that the impact of state tax rates will have more influence in the future than it has in the past.

            "let's talk about that"

            by VClib on Mon Jan 21, 2013 at 10:15:21 AM PST

            [ Parent ]

          •  Yeah. those sunset provisions always work out. (0+ / 0-)

            "Keep the Brown tax rates!" will be the battle cry from the left.

        •  The 13.3 percent rate (0+ / 0-)

          is only for income above 1 million. I am pretty sure that only applies to like .00001 percent of all taxpayers, so let 'em go live in some third world hellhole like Florida. Who cares.

          •  runfastandwin - it's a small number (0+ / 0-)

            but larger than .00001 percent. The challenge for California is that the top 1% pay in the area of 20%+ of all the state revenue. The income of the top 1% is variable, in years when the economy is good it is very high and in down cycles it can drop by 50% or more. Stock options play a big part in this and all of the stock option gains are taxed as ordinary income. The state got in real financial trouble because when we had the dot com boom cash rolled in because of stock options and the legislature baked that new level of income into the budget, rather than viewing it as a short term windfall.

            Now, a 50% decline when you earn $ 2 million is still plenty but the state has $133,000 less income just at a time when government has higher costs due to the declining economy.  That's one of the reasons we have such a high sales tax and that the 9.3% state rate applies to all income over $50,000, it's an attempt to have more predictable state tax revenue .

            "let's talk about that"

            by VClib on Mon Jan 21, 2013 at 10:06:16 AM PST

            [ Parent ]

    •  Oh yes, (1+ / 0-)
      Recommended by:
      Ian Reifowitz

      he'll be quite the model of a 'rational actor' in the parlance of your economic-speek, VClib, because it "makes no sense" for him to pay California income taxes.
      Of course all the while his wife and children will benefit from the resources and schools that us not so income fortunate citizens of California will have provided with our taxes.

      "When I see I am nothing, that is wisdom. When I see I am everything, that is love. My life is a movement between these two." - Nisargadatta Maharaj.

      by mkor7 on Mon Jan 21, 2013 at 09:51:10 AM PST

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      •  mkor - while Mickelson is living here in CA (0+ / 0-)

        he is certainly paying more than his share of taxes to the State of California as compared to the resources his family uses. We will be sorry to see him go. I estimate he pays $3-5 million in state income taxes. Although he grew up in a middle class family, Phil went to private school so my guess is that for security, and other reasons, his children may not attend public school.

        "let's talk about that"

        by VClib on Mon Jan 21, 2013 at 01:43:35 PM PST

        [ Parent ]

        •  Without government and the rule of law (1+ / 0-)
          Recommended by:
          mkor7

          There is no PGA tour. Or paper wealth. Mickelson and those of great wealth reap great benefits from the security for their property that government provides by maintaining the order necessary for a complex capitalist economy to function.

          •  Ian - the same security, order (1+ / 0-)
            Recommended by:
            nextstep

            and infrastructure are available to all US citizens in Florida, Nevada, and Texas. Washington, Alaska and South Dakota also have no state income tax but are not as good a place for a PGA professional to live. With the exception of athletes who play on teams in CA few other professional athletes live here, particularly those with large endorsement incomes. The economic benefits of living in a no tax state are just too compelling and they all have top tax advisers. Phil isn't going to give up playing golf so he will be paying higher federal income taxes. The easy thing to change is his state of residence for tax purposes and that's what he will do. That will save him $3-5 million a year of state income tax.  

            "let's talk about that"

            by VClib on Mon Jan 21, 2013 at 03:25:27 PM PST

            [ Parent ]

            •  But he won't move his kids out of school (1+ / 0-)
              Recommended by:
              mkor7

              Unless he's an incredible jerk. I just don't see it.

              •  He might wait until the end of the school year (1+ / 0-)
                Recommended by:
                nextstep

                My guess is that his children are in private school and he will be able to duplicate their education anywhere he chooses to live. His kids could come back to their home in California on holidays and during summer vacation. Phil has his own airplane so they could even come back on weekends to play with friends. I don't think he will sell his CA home. After the statement he made I would be surprised if he didn't move.

                "let's talk about that"

                by VClib on Mon Jan 21, 2013 at 03:55:09 PM PST

                [ Parent ]

                •  After tax income is 30% higher in no income tax st (1+ / 0-)
                  Recommended by:
                  VClib

                  If his net tax rate on income in CA is 57%, whatever income he can move out of CA to a no income tax state is 30% greater than what stays in CA.

                  A significant incentive to move.

                  The most important way to protect the environment is not to have more than one child.

                  by nextstep on Mon Jan 21, 2013 at 04:36:55 PM PST

                  [ Parent ]

    •  I've heard that assertion from your last paragraph (0+ / 0-)

      before, but I'm not sure that it's that simple.

      If, to take a ridiculous example, Mickelson lived 182 days (just less than 50%) in California and three days apiece in each of the other 55 states and territories, plus three each in six other countries to make 183, would he really be able to designate a different state as his primary residence?

      Plaintiffs' Employment Law Attorney (harassment, discrimination, retaliation, whistleblowing, wage & hour, &c.) in North Orange County, CA.

      "I love this goddamn country, and we're going to take it back."
      -- Saul Alinsky

      by Seneca Doane on Mon Jan 21, 2013 at 10:00:45 AM PST

      [ Parent ]

      •  SD - I am sure there is a formula (0+ / 0-)

        We could go to the California code and look it up. Mickelson likely doesn't live anywhere for 182 days a year. In the weeks he is on tour he is gone from Tues-Sun, plus foreign events, plus personal, promotion, and endorsement travel. My guess is that in 2012 he was likely in California only 100 days or so. The family could live in Florida during the school year and California in the summer and it would flip his state of residence for tax purposes to Florida.

        "let's talk about that"

        by VClib on Mon Jan 21, 2013 at 10:21:18 AM PST

        [ Parent ]

        •  Yes, in *that* case it would. (1+ / 0-)
          Recommended by:
          VClib

          I'd just be surprised if residency didn't involve a plurality (or perhaps a strong plurality, whatever that might be) of days of residence rather than an absolute majority and if not then whatever ya want.  Not going near the tax code today.

          Plaintiffs' Employment Law Attorney (harassment, discrimination, retaliation, whistleblowing, wage & hour, &c.) in North Orange County, CA.

          "I love this goddamn country, and we're going to take it back."
          -- Saul Alinsky

          by Seneca Doane on Mon Jan 21, 2013 at 11:40:20 AM PST

          [ Parent ]

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