Phil Mickelson, in a moment he says he now regrets, expressed his incredulity that his total tax hit in his beloved California was going to be “62 or 63%” in 2013. The state’s share of that was just increased from 10.3% to 13.3% due to voter passage of Proposition 30, a brazen, retroactive, money grab targeted at the “selfish” rich who weren’t paying their fair share. This, in order to avoid dealing with the state’s out of control, profligate spending. I’ve since lost track of it, but last year their annual budget deficit soared from $9 billion to $15 billion in just six months.
Given that Mickelson had the percentages that precise, it seemed that some year-end tax planning had finally awakened him to what the state of California is doing to him. At the Humana Challenge, one reporter overheard him talking about this with his pro-am partner, a former CEO of a large bank. So it was on his mind.
And the upshot of it all was that he was talking about having to take “drastic measures.” Since it had come up in that same session that one reason Steve Sticker was planning on cutting back on his playing schedule was because of the federal government’s new higher tax rates on the “1%,” some took Phil’s measures to include retiring or at least leaving California.
In fact, when he pulled up stakes in Arizona — where he graduated from ASU — to move back to California, I wondered what he knew that I didn’t.
My wife and I lived in California for twenty-three years, longer than anywhere else. We loved California. Still love California, or at least what California used to be.
But as the 1998 elections were winding down and it became obvious that the good citizens of the state were going to elect Gray Davis as the governor, a liberal, life-long bureaucrat, I knew the state was lost. The Democrat legislature and overwhelming voting blocks in LA and San Francisco made it unlikely that anything good would be happening in the state for a long time. The sixteen-year, fiscally conservative reign of Governors George Deukmejian and Pete Wilson was over.
At that point I was already contemplating moving to Arizona for the better practice and playing conditions in pursuit of my dream to qualify to play on the Champions Tour. At that point I was following my guideline of always looking for the next thing to do in furtherance of my goal, and then doing it.
Selling my house to move to a desert I’d never been to before, save for a one-day business trip, was a pretty big deal to say the least. But Davis’ election was the trigger that set the wheels in motion; we had to get out while the gettin’ was good. A contributing factor was that our congresswoman was a member of the Socialist caucus in the House (in a time when that was still brazen and vaguely unpatriotic to most Americans). That and the fact that because our district in Marin County had been gerrymandered, our votes never counted for anything.
By the time we fled the state in May of 1999, the top marginal rate was 9.2%. Over the years it crept up to 10.3%. And now to 13.3%, a 29% increase in just one year. That’s how bad it is in California.
Mind you, I am not a rich man and at this point in my life I don’t expect to be. But with an MBA in Finance from USC, I knew that no good would come of killing the golden goose: strapping high income individuals, entrepreneurs and corporations with ever-higher taxes and regulations. Ultimately, I knew that my life would never be comfortable unless theirs was. Why? Because they spend their money directly into the economy as opposed to having it sucked into a faceless, centrally planned, inefficient, bloated bureaucracy.
With Mickelson’s annual income just estimated by Golf Digest to be a little over $45 million, that’s a total tax haul by the bureaucrats of $28.35 million with the state income tax alone taking $6 million of that. Conversely, Mickelson will be left with just $16.65 million of his $45 million income. A lot of money to be sure, but nowhere near “fair,” today’s mantra of all imperious, money-wasting, self-serving bureaucrats.
One liberal writer opined that because he would be left with “tens of millions” (uh, no) in a terrible economy, his whining was “self-serving, selfish and frightfully not self-aware.” That, of course, would only be true in a country where the writer felt a sense of entitlement to another man’s earnings. With all of the class warfare being fomented by our president, one follows the other. This post would not have been necessary if Mickelson’s critics hadn’t been such self-righteous, sanctimonious scolds. It’s disgraceful.
It’s particularly disgraceful in light of Phil and his wife, Amy’s, strong sense of responsibility to help other people. In “The Other Side of Phil,” in May of last year, I linked to a heartwarming story by Alan Shipnuck at Golf.com, about five families that benefited from the Mickelson’s quiet philanthropy. They need no lessons in opening their hearts and wallets to their fellow man, as is true for most wealthy people.
Four years after we left the state, Gray Davis was recalled by the voters for his fumbling incompetence during the state’s energy crisis. And almost fourteen years after we left, the state has devolved into such an unmanageable quagmire, I know many other California expats who live here in Arizona too.
It’s sad, we all agree. Because we remember it when… And don’t see a chance that we’ll ever be able to return.