Michelson hit with 61% tax bill on winnings

[ranbethscards]

dailyfinance.com reports:

Mickelson, a 43 year-old Californian, won golf's oldest tournament by birdying four of the last six holes. His prize for this impressive feat: £945,000, or $1.43 million. The week before, "Lefty" -- as the normally right-handed Mickelson is called, for his left-handed swing -- won the Scottish Open, bringing his total winnings for two weeks of play in the UK to £1,445,000, or about $2,167,500.

But as K. Sean Packard, an expert on pro athletes' taxes, writes at Forbes, Mickelson won't be taking home nearly that much:

The United Kingdom, which has authority to set Scotland's tax rate until 2016, graduates to a 40% tax rate when income hits £32,010 then 45% when it reaches £150,000. Mickelson will pay £636,069 ($954,000, or 44.02%) on his Scottish earnings.​

On top of that, Mickelson has to pay UK tax on a portion of his endorsement earnings in Scotland. Any bonuses he receives for winning these tournaments and moving up in the rankings will also be taxed at 45 percent. And Mickelson's endorsement income isn't chump change: As Packard notes, Roger Federer and Tiger Woods (whom Mickelson defeated at the Open) are the only athletes who earn more in this category.

And that doesn't exhaust Michelson's tax liabilities from his British triumph. He won't have to pay federal taxes on these winnings, thanks to a foreign tax credit, but the exemption doesn't apply to self-employment taxes, the Medicare surtax, or his home state of California's 13.3 percent take.

It all adds up to a rate of 61.12 percent -- right around the onerous amount Mickelson famously groused about in January: "There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state and, you know, it doesn't work for me right now."

Perhaps thinking of his good-guy image, and those lucrative endorsement deals, Mickelson felt compelled to apologize for having vented his spleen: "Finances and taxes are a personal matter," he said in a statement, "and I should not have made my opinions on them public." One can only imagine how Mickelson feels now, contemplating a take-home rate of 30 percent (Packard's calculation, subtracting tax-deductible expenses from a post-tax net of $842,700).

 

[camaropat]

I think all golfers should be taxed like this. Maybe then they would quit playing that dumb game and it wont take up time that they could be showing infomercials every weekend.

Honestly how anybody can watch more than 2 minutes of golf and not fall asleep is beyond me..... heck I fall asleep playing it, lol

............. but then again a lot of people say that about NASCAR too..... Look a left turn, and another left turn.... oh and here comes a left turn!

 

[IQless1]

My family has always builds mini-golf courses for everyone to play on during family reunions. That said, I've never played a round of golf elsewhere.

 

[Leafsfan1967]

I think all golfers should be taxed like this. Maybe then they would quit playing that dumb game and it wont take up time that they could be showing infomercials every weekend.

Honestly how anybody can watch more than 2 minutes of golf and not fall asleep is beyond me..... heck I fall asleep playing it, lol

............. but then again a lot of people say that about NASCAR too..... Look a left turn, and another left turn.... oh and here comes a left turn!

I love both golf, and nascar. I feel the same way as you do in regards to falling asleep about NBA basketball, NFL football, and MLB. You don't find nascar boring, because you know the sport very well, like me. I follow the local tracks, and have since I was a kid, so anything to do with stock car racing interests me. I was an avid golfer in my youth, and completely respect what the pros can do, so maybe that's why I enjoy watching it? Basketball, and football are not as big up here, and baseball interest has fallen off the table here, so I have zero interest in them. I will watch NFL football every week, but the constant running of the ball for a yard here, and a yard there bores me, lol. Canadian football has way more action, and excitement with the one less down. Up here, it's all about the hockey.

 

[thajayz]

Phil has complained a lot about having to pay high taxes on his earnings, properties etc. If he lived in a Scandinavian or European country he'd probably have an aneurysm due to the tax levels. I totally disagree with him. He's well overpaid even after the taxes are taken out. I am still a fan of his golf game no matter what his politics are. I'm glad that he turned his career around the past few years (in terms of finally winning majors) because he is good for the game. His personality is very marketable.