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Professional golfer Phil Mickelson recently had this to say about the amount he’s taxed:
"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.”
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Two things help explain why the government has invaded Mickelson’s income like this. First, he’s one of the highest-paid athletes in sports. When you consider his tournament winnings and sponsorships, Mickelson makes around $40 million a year. Second, Mickelson lives in California—a state notorious for its high tax rates.
"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," he said. "So I'm going to have to make some changes."
Mickelson might need to start by moving out of California, but that won’t help with the federal rate. The issue here is simply this: Is it ethical for the government to take nearly two-thirds of someone’s income—regardless of what they make?
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Sure, Mickelson is probably making out okay, even though he keeps less than 40% of what he makes. But, still, think about that! He only keeps less than 40% of what he makes. That’s nuts!
How do you feel about your tax rate? Most of us understand the purpose of being taxed, but what percentage do you think is fair?