Here’s the fact that EVERYONE (including me) initially underappreciated concerning Phil Mickelson and CA state income taxes. Starting in 2013,golfer Phil Mickelson’s NET state income tax rate has jumped an astonishing 83.6%! And yes, this huge increase hits most Californian making more than $2 million income.
Here’s why. Until 2013, state income taxes were deductible for federal income tax purposes. Starting in 2013, for the really rich, this deductibility largely goes away (as does deducting property taxes and many other deductions). For people with over $2 million of income, they lose 80% of such deductions.
With Proposition 30 passed in November, CA has raised its income tax on the wealthy by 29%. The combined tax increase is breathtaking. Do the math, and you find that in 2011 the net CA income tax for Mickelson was 6.7%. In 2013 his net CA income tax is 12.3% — an increase of 83.6%.
Some would respond that Mickelson has been subject to AMT (the Alternative Minimum Tax) and thus could not deduct his state income tax in years past. But almost surely he has NOT been subject to… Read More