Among the sweet and sour sentiments expressed during yesterday’s Inaugural festivities, this bit of news struck a decidedly sour note:
Speaking after Sunday’s Humana Challenge, Mickelson hinted at what could be a “drastic” change for the world of golf, and himself in particular. Thanks to his substantial earnings and his residency in California, Mickelson now falls into two sets of laws that substantially increase his taxes … and he’s not pleased.
“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,” he said. “So I’ve got to make some decisions on what I’m going to do.”
Aside from the rather important dual facts that (a) he seems to be conflating marginal and average taxes, likes so many people do, and (b) to pay anything like the rates he’s talking about he’d have to have the most incompetent financial advisers in the world; Mickelson does put a real question on the table. Should we worry that in a progressive tax system extraordinary people will no longer feel a continued financial incentive to do extraordinary things? And if there’s any risk of that, how do we discern the difference between sheer greed (and in the case of people who become insanely rich playing games, perhaps ingratitude) and some presumed rational breaking-point where toil and trouble are no longer worth the effort?
I guess the simple answer to that is: experience will tell. If, somehow, at a time of exceptional concentration of wealth at the top, and of a “winner-take-all economy” in which the Phil Mickelsons of the world are rewarded all out of proportion to any conception of the value they add, people at the top of every occupational category start disappearing, then we’ll know it’s time to reconsider top marginal tax rates. Short of just letting the very rich set their own tax rates (which we’ve indirectly done over the years via campaign contributions and lobbying campaigns, one could argue). there’s no other way to identify optimal marginal tax rates, is there?
So we’ll see. Perhaps Phil Mickelson is just the first well-known Atlas to shrug. Or perhaps he’s an egomaniacal jerk who actually thinks gross income is an accurate measurement of personal worth. Or maybe he’s just a loudmouth who’s already chastising himself for bitching about his after-tax income when his fan-base is mostly composed of people who would accept his job for peanuts, as SBNation’s Emily Kay notes:
Boo-frickin-hoo, Phil. We’re guessing the self-serving gripes of a multimillionaire golfer ranked seventh on Forbes 2012 list of highest-paid athletes, who earned some $47.8 million in prize money and endorsements as of mid-June, won’t sit well with many of his fans who, living and toiling in the real world, can only dream about paydays like the $1.1 million he made for winning last year’s Pebble Beach National Pro-Am.
It’s tempting to say that professional sports, and quite possibly other occupations, might even benefit from greater turnover at the top, giving people who are still motivated by the joy of playing the game a chance. So maybe we can tolerate letting a few gazillionaires drift off to Galt’s Gulch to nurse their wounded pride. It might be just what our economy and society need.