This impulsive and misguided exercise in class warfare<\/a> surely will backfire as more and more productive people flee to other states \u2013 particularly those that don\u2019t impose any state income tax<\/a>.<\/p>\n We know that people cross state borders all the time, and it\u2019s usually to travel from high-tax states to low-tax states<\/a>. And we\u2019ve already seen some evidence that the state\u2019s new top tax rate is causing a loss of highly valued jobs<\/a>.<\/p>\n This mobility of labor and talent is one of the reasons why California is going to get a very painful lesson about the Laffer Curve<\/a>.<\/p>\n Politicians (with help from short-sighted voters) can raise tax rates. But they can\u2019t force people to earn income.<\/p>\n Now it looks like one of the super-rich is fed up and looking to make himself less vulnerable to California\u2019s kleptocrats.<\/p>\n Here are some excerpts from an ESPN story<\/a>.<\/p>\n Phil Mickelson said he will make \u201cdrastic changes\u201d because of federal and California state tax increases. \u2026The 42-year-old golfer said he would talk in more detail about his plans \u2014 possibly moving away from California or even retiring from golf\u2026 Mickelson said. \u201cI\u2019ll probably talk about it more in depth next week. \u2026There 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\u2019t work for me right now. So I\u2019m going to have to make some changes.\u201d \u2026\u201dIf 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\u2019s 62, 63 percent,\u201d said Mickelson, who lives in Rancho Santa Fe. \u201cSo I\u2019ve got to make some decisions on what I\u2019m going to do.\u201d<\/p>\n<\/blockquote>\n But so what? It\u2019s still outrageous and immoral that government is confiscating one-half of the income he generates.<\/p>\n Heck, medieval serfs were virtually slaves, yet they only had to give at most one-third of their output to the Lord of the Manor.<\/p>\n I hope he\u2019s serious and that he escapes from the Golden State\u2019s fiscal hell-hole.<\/p>\n And if he does, what will it mean for California government finances?<\/p>\n Well, here\u2019s what Wikipedia says<\/a> about his income.<\/p>\n According to one estimate of 2011 earnings (comprising salary, winnings, bonuses, endorsements and appearances) Mickelson was then the second-highest paid athlete in the United States, earning an income of over $62 million, $53 million of which came from endorsements.<\/p>\n<\/blockquote>\n Now let\u2019s bend over backwards to make sure we\u2019re not exaggerating. Notwithstanding the Wikipedia estimate, let\u2019s assume his annual taxable income will be only $40 million for 2013 and beyond.<\/p>\n With a 10.3 percent top tax rate, California would collect about $4.12 million per year. And Mickelson apparently thought that was tolerable.<\/p>\n But guess how much the politicians will collect if he leaves the state? I\u2019m tempted to say zero, but they may still get some revenue because of California-based tournaments and other factors.<\/p>\n I can say with great confidence, however, that California won\u2019t collect $5.32 million, which is probably what the politicians assumed when they seduced voters into approving the 13.3 percent tax rate.<\/p>\n After all, that assumption only works if Mickelson is willing to be a fiscal slave for Jerry Brown and the rest of the crooks in Sacramento.<\/p>\n As such, I\u2019ll also state with certainty that California\u2019s politicians won\u2019t collect $4 million if Mickelson leaves for another state. Or $3 million. Or $2 million. Or even $1 million.<\/p>\n The best they can hope for is that Mickelson decides to stay in the state while also reducing his taxable income. In that scenario, the politicians might still pocket a couple of million dollars.<\/p>\n Not as much as they collected when the tax rate was 10.3 percent, and far less than what they erroneously assumed they would get with a 13.3 percent rate.<\/p>\n Regardless of Mickelson\u2019s ultimate decision, California is going to be in trouble because most rich people \u2013 whether they\u2019re golfers, celebrities, investors, or entrepreneurs \u2013 have considerable control over the timing, level, and composition of their income<\/a>. And they can afford to move.<\/p>\n This is why you don\u2019t want to be on the downward-sloping portion of the Laffer Curve. Everyone\u2019s a loser, both politicians and taxpayers.<\/p>\n So we\u2019re going to see the Laffer Curve get revenge on California<\/a> and I\u2019ll be first in line to say \u201cserves you right, you blood-sucking parasites.\u201d<\/p>\n If you want more information, here\u2019s my video on the Laffer Curve.<\/p>\n\n
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He\u2019s actually overstating his marginal tax rate. I suspect it\u2019s closer to 50 percent.<\/p>\n\n
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