Phil Mickelson Employs America's Dumbest Accountant
If he's really paying a 63 percent tax rate, then all Phil Mickelson had better worry about is firing his accountant and hiring a new one. I mean, is he kidding?:
"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," Mickelson said. "So I've got to make some decisions on what I'm going to do."
Social Security? He pays that on the first $113,000 or so of his earnings. He made...ready...$47 million last year. He could lose what he pays in Soc Sec taxes in his golf bag. Even if he is actually paying 63 percent, then the poor fellow was living on a mere $17.4 million last year.
And if he did that, he and his financial advisors are pretty stupid. Barry Ritholz at The Big Picture blog explains why:
But if we can be serious for just a moment — and ignore the oblviousness of Mickelson’s utter lack of gratitude for his soft lot in life — this raises actual financial issues worth exploring. What are the legal — and I mean black-&-white-legal, no shades-of-grey here — options that people (whether they are means or not) should consider to minimize their taxes and maximize their investing returns?
A short list would have to include:
• Muni bond portfolios that throw off tax-free income;
• Estate planning (including 2nd to die insurance) which functionally eliminates estate taxes;
• Contributions to your favorite charity(s) to reduce gross total taxable income;
• Establishing a Family Foundation to further reduce tax base;
• Maximizing tax deferred accounts — 401k, profit sharing, KEOGH, defined benefit plan and cash balance plans — to generate largest legal deductions;
There is nothing especially fancy here.
Of the list above, Family Foundations and Estate Planning primarily matter only to those with a wealth north of $5 million — but everyone can take advantage of tax-free muni income, tax deductions for charitable donations, and maximizing your retirement accounts.
Ah well. Now Lefty is changing his tune a bit:
So Mickelson, being the astute man that he is, quickly realized that the true “everyday man” would have a difficult time relating to someone earning $47.6 million in this difficult economy complaining about what amounts to a 9% increase in his tax rate (combining state, federal and payroll tax increases), only 3% of which came from the state of California...
...Mickelson issued a statement to Fox News late last night apologizing to anyone he may have “upset or insulted” and saying that "Finances and taxes are a personal matter and I should not have made my opinions on them public."
Just another reason to root against him, as the new golf season commences.