Mickelson and rich people being dumb about their money

Just because you are really rich does not mean you know anything about money.  Especially if you got really rich because you happen to be very good at hitting a golf ball.  In case you didn’t hear from Phil Mickelson, here’s Tomasky:

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…

[Short version.  All sorts of tax free investments.]

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…

Anyway, apparently feels he may need to move out of California to a state with a lower state income tax.  Because he’s really going to miss that $1.5 million so much out of 47, apparently.  My take…

I could be wrong, but I vaguely recall some research showing very little, if any, impact for differences in state personal income tax rates.  There’s a reason rich people live in NY, CT, and CA.  Not too many of them are just going to move to TX or Idaho or wherever for lower taxes.

Mickelson’s problem is that his crazy 63% figure showed an amazing ignorance of economic policy.  http://www.thedailybeast.com/articles/2013/01/22/phil-mickelson-employs-america-s-dumbest-accountant.html
If I made $47 million a years I would simply live where I wanted to live, damn it.  If I loved the Pacific ocean, Los Angeles, and Hollywood, I’d live in California even it it costs me $10 million more a year.  Do you really feel it when you make that much?  Or, if I loved Disney and the Atlantic and hanging with Lebron, I’d move to Florida.  As most residents of the Triangle know, location really does matter for quality of life.  If money is no object (which it shouldn’t be for a multi-millionaire) why in the world wouldn’t you just live in the place with the best (subjective) quality of life?!  Presumably, to this point Mickelson has decided that this place is California.  For a man in his financial position, it literally makes no sense to move somewhere else over 3% of his income.
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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

One Response to Mickelson and rich people being dumb about their money

  1. itchy says:

    If his country club raised its rates by 3%, he wouldn’t even notice. Same for his favorite restaurants, first-class airline seats, chauffeur service, homeowner’s association. California raised its rates for delivering the lifestyle of living in California. If it was a business, the code would be “they’re just passing these increased expenses on to customers.”

    He can shop around if he wants, but if he really enjoys California, he’ll pay the bump in costs. If Florida can match this level of service, fine. But whining about it is just unbecoming. Do it or don’t.

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