Monday, January 21, 2013

Are High Taxes Driving the Wealthy from California? Just ask "Lefty"

In his typical frank and outspoken manner, professional golfer Phil Mickelson warned Sunday that the tax burden on his earnings may compel him to leave his home state of California. Speaking after Sunday's Humana Challenge, "Lefty" noted:

"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. So I've got to make some decisions on what I'm going to do."
Phil Mickelson is not an evil person.  To the contrary, he is a model citizen and PGA role model, well known for his charitable giving.  But it is only natural that a person wants to protect as much of his or her earnings as possible from taxes.  If Mr. Mickelson can save 9% or more of his annual income by moving to Florida or Texas, he will do so.

This is why taxing the rich, while red meat for the liberal base of the Democratic Party, turns out ultimately to be self-defeating in terms of increasing government revenues.  And this is not just a California issue, but a national one as well.  I remember back in the days of confiscatory federal income tax rates for high-income brackets how many Holllywood celebrities took up residence in Europe or other tax havens to protect their earnings.  I predict that the exodus from California and the U.S. will include many of the same entertainment industry figures who loudly echo the calls to tax the rich.  And believe me, it will not be the likes of Warren Buffett or Bill Gates who feel the pinch, but rather the upper middle class professional who can't readily relocate his business and residence. 

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