Escaping the high-tax rough
What do Phil Mickelson and Tiger Woods have in common — besides being quite wealthy thanks to their extraordinary golf skills?
They both think California’s taxes are too high.
And they’re not alone. “The Great California Exodus: A Closer Look,” a 2012 study from the conservative Manhattan Institute, reported that over the last two decades, California has suffered a “net domestic out-migration” averaging 225,000 residents per year — due in large part to high taxes.
Therein lies a revealing lesson about the counterproductive results of excessive tax hikes.
Mr. Woods said last week that he moved from his native California in 1996 because state taxes there were so high — and to Florida, in part, because it doesn’t have a state income tax.
Mr. Woods was responding to a question about this comment, two days earlier, from Mr. Mickelson:
“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.”
Mr. Mickelson indicated that he’s considering fleeing fiscally reeling California, where voters approved a referendum in November again boosting the state sales tax and the state tax on incomes of $250,000 and more. That measure hits incomes of $1 million and more with a nation-high 13.3 percent tax.
The deeper tax bite on Mr. Mickelson also includes boosts in federal income and capital-gains taxes on “the rich” — the “fair share” imposed at the insistence of President Barack Obama in the fiscal cliff deal.
Mr. Mickelson later expressed “regret” for his bottom-line remarks. As he put it: “Finances and taxes are a personal matter, and I should not have made my opinions on them public.”
And yes, like everyone else, Mr. Mickelson should pay his “fair share” of taxes.
Still, lest you detect unfairness by those, rich or otherwise, who seek legal means for minimizing tax bills, they’re just lawfully protecting their financial interests.
So is former French President Nicolas Sarkozy as he ponders moving to England rather than pay France’s new 75 percent “millionaire tax.”
As Forbes reported: “Sarkozy and wife Carla Bruni represent only the latest super-wealthy French to consider fleeing. The country’s richest man, Bernard Arnault — he of a $42 billion fortune tied to luxury goods-maker LVMH — may go to Belgium to escape the fiscal pressure. ... And Academy Award-nominated French actor Gerard Depardieu has already become a Russian citizen.”
Lamenting such tax-reduction choices is as futile as lamenting the tide going out.
Thus, a rising number of Californians — and not just world-class golfers — are getting out of that state to escape government’s rising claim on their incomes.
And by going for the green, they are providing another reminder that ever-higher taxes yield diminishing returns.