Tax Policy 101: Raising taxes diminishes incentives
January 24, 2013 at 1:36 pm in News by Dustin Siggins 8 Comments
I’m a little late on blogging about this, but apparently Phil Mickelson has created quite a stir with his comments about the tax policies of America and his state of residence, California:
Mickelson, regarded as the “People’s Choice” for his connection with fans, put his popularity on the line with polarizing comments about how much he has to pay in state and federal taxes. The four-time major champion said it might lead to “drastic changes,” such as moving from his native California, and that it already caused him to pull out of the San Diego Padres’ new ownership group.
Mickelson has apologized for his comments, which basically consist of telling the truth about the impact of state and national tax changes on his life:
“Finances and taxes are a personal matter, and I should not have made my opinions on them public,” Mickelson said in a statement released Monday night. “I apologize to those I have upset or insulted, and assure you I intend not to let it happen again.”
Mickelson first made a cryptic reference to “what’s gone on the last few months politically” during a conference call two weeks ago for the Pebble Beach National Pro-Am, where he won last year for his 40th career PGA Tour title. After his final round Sunday at the Humana Challenge, he was asked what he meant.
“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 it doesn’t work for me right now,” he said. “So I’m going to have to make some changes.”
Mickelson said the new federal tax rate, and California voting for Proposition 30 to increase taxes on the earnings over $250,000, contributed to total taxes that tap into more than 60 percent of his income.
Golf Digest magazine, in its annual survey of top earners in the sports, said Mickelson made just over $45 million last year on and off the golf course.
For all the controversy, Mickelson’s comments appear to reflect the opinions of many PGA players, including Tiger Woods:
A majority of PGA Tour players live in Florida and others in Texas, two states that have no state income tax. Tiger Woods grew up in Southern California and played two years at Stanford. He was a California kid when he won an unprecedented three straight U.S. Amateur titles, but when he made his professional debut in Milwaukee a week later, he was listed as being from Orlando, Fla.
“I moved out of here back in ’96 for that reason,” Woods said Tuesday.
In short, Mickelson is proving every supporter of higher taxes on the rich wrong – tax policies do affect those at the top. They do change behaviors and impact choices. They do prevent business investment (Mickelson decided to not invest with the San Diego Padres because of the tax changes).
In addition to incentivizing Mickelson to change his business decisions and potentially move his residence, raising his taxes does two other bad things: first, it gives strength to the lie that both California and America have a tax revenue problem, not a spending problem. Second, it says to all Americans their money belongs first to the government, and whatever is left belongs to the earner.
Mickelson is not the only upper-income person changing residences because of tax policies, and he won’t be the last. But his might be the most high-profile example as to why higher taxes are not the answer to the nation’s spending problem.
It constantly amazes me, the stupidity of the left, and especially Barack Obama. If you asked any third-grader to predict the results of theft, their answers would always include the option to leave the location where you were robbed. There is no mystery Abbott it. The POOR, on the other hand, do not have the option to move at will, so you are left with the highest taxes being assessed on the lowest income segment of the population. Go for it, Phil. Leave the U.S. entirely, but do not let the “takers” use your skills and labor to support their screwed up utopian plans.
We need a flat tax where EVERYONE pays. No exceptions. No excuses.
Everyone should pay their fair share of what the government costs.
Let’s see how everyone votes when they actually have to pay for what they vote for.
It is a ludicrous thought that a country with half the population living off the other half of the population will survive for very long.
Everyone needs to have some skin in the game.
Agreed, however, this will never happen with either political party. Goes back to government coruption. It becomes a bigger hurdle each and every day because of things like extending unemployment benefits, making it easier for people to get on ssi, and obtaining food stamps there is no way these people are going to vote for politicians who want to take away or curb (KING) obama’s hand outs to THE growing population of people without shame or dignity. Sad to say this, however, this is what our country has become.
I prefer the Fair Tax….there are many reasons but one of them is this…I dont want to have any kind of IRS or papers or receipts that I have to keep, etc…Nor do I want to fill out any kind of form….The Fair Tax puts us in charge of how much taxes we pay and the Govt has absolutely No control over our sources of income , etc….we are not required to have forms or receipts or anything else….also, the amount of income I make isnt of any business to the Govt….Our freedoms are eroding step by step….we have to minimize everything that we have to do with the Govt…..IMO…
DB – I agree – We need to fix Social Security so recipients only get back what they put in with a adjustment for inflation and interest. Stopping payments to the deadbeat moochers is not enough to balance the budget and lower the deficit.
We also need to get rid of the Medicare prescription drug plan which is a giveaway to the drug industry. This is one of the biggest expenditures to the deficit since no taxes were raised when Bush passed it to win re-election in 2004.
Great idea DBWriter. However, now we are even farther from anything resembling fiscal sanity in this country, and it doesn’t look like it’s going to get better anytime soon…
This is not a surprise. The surprise is that low income people actually think that taxing higher income people makes themselves better off. The education system is responsible for allowing the teaching of incorrect socialist doctrines in our schools. Apparently the media consists of people educated in our schools.
What is overlooked is that you don’t tax the employer, you tax the employee.
The employer either finds a way to manage his business at a profit, or he goes away.
The employee has only his services to sell, take his job, you take his sustinence.
Money is a means of exchange of value,
A good carries its original value, plus all the services that bring it to market,
A service is absolutely worthless without either a good to exchange it for, or attach it to.
Government produces no saleable goods, what value are its services?