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Tuesday, January 22, 2013

Phil Mickelson, Tiger Woods and Intel: CA Taxes are Too High to Invest or Live Here

Bob Brinker has spoken at length about what he calls the dysfunctional government in California (Taxifornia) and our excessive tax rates.  In the last election, CA voters voted to enact a retroactive tax hike of an additional 3.0% on its richest citizens for all of 2012.  Those "only" making $250,000 a year will "only" have to pay an additional 1.0% for a total rate of 10.3% on ALL income (earned and capital gains are taxed at the same rate in Taxifornia.)  We also raised our sales taxes so I now pay 8.625% in Santa Clara county.

Those making over $500,000 a year in California will pay the highest rate of 12.3% on 2012 and 2013 income.  I posted a full summary of the rates and changes here:
Bob Brinker said the rich might get tired of this nonsense and leave the state.  This weekend, 42-year old PGA Tour star Phil Mickelson, with $67 million in PGA Tour earnings which does not count his endorsement income that can be far more, said he would make drastic changes because of higher Federal and California taxes.
"It's been an interesting off-season," Mickelson said. "And I'm going to have to make some drastic changes. I'm not going to jump the gun and do it right away, but I will be making some drastic changes."
Mickelson did not rule off just flat-out retiring from golf.  "I'm not sure what exactly, you know, I'm going to do yet," he said.
"I'll probably talk about it more in depth next week. I'm not going to jump the gun, but there are going to be some. 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. So I'm going to have to make some changes.

"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%. So I've got to make some decisions on what I'm going to do."
Mickelson could save as much as 12.3% just by moving to Florida where there is no state income tax.  He's on the road most of the year so staying in California might be more of a family decision.  From Phil Mickelson warns of ‘drastic changes’ because of state, federal tax situation
He acknowledged that he could end up leaving his home state of California. And he further agreed that the financial issues were the reason why he pulled out of an ownership team that purchased the San Diego Padres back in August.
This is the first I've heard of people making a decision NOT to invest in CA due to the higher taxes.  Of course, Intel builds its factories outside of CA even though its headquarters is here and the whole Silicon Valley used to be full of expensive (high property tax) chip making factories.  They are almost all gone now... gone to states with lower tax rates.

Today Tiger Woods, in his Tuesday morning news conference before this week's Farmers Insurance Open at Torrey Pines, said he agrees with Phil Mickelson.
"Well, I moved out of here back in '96 for that reason. I enjoy Florida, but also I understand what he was, I think, trying to say. I think he'll probably explain it better and in a little more detail."
I bet Bob Brinker will break his arm this next weekend patting himself on the back while saying "I told you so!"

1 comment:

  1. I have to laugh to a degree. A long time ago Brinker recommend UTEK. The company was very well run, but what he didn't say was that he worked for the company. I bought the stock a few years after he originally recommended it because it was lower that his recommended price and I could see the company was landing new business and had a good cash flow. But the stock didn't move. Then Brinker admitted his failure and came clean with his association with the company. And left the company...I never sold. He recommended people put that money into another European telecon stock that went no where. Since Brinker told people to sell UTEK has almost tripled. I'm ok if people make mistakes. He even said don't but gold and we know what happened to that. and there are others....But when a person refuses to admit the purchase price and date he recommended a loser just recommended a winner. Earlier in his career, he recommended some super winners. It's been decades since he recommended a winner. I do agree with his index funds and insights into how the market swings. I don't believe he has a model. One thing I can tell you is when people see a guy who bounces a check trying to pay for shoes ends up getting a $700K loan, it's time to bail out of the market. I was out of the market 3 years before Brinker missed it. During the time I went to bonds and then switched back into stocks a month after 911. UTEK I kept and did very well. My point is if you use common sense, you can see when the market is about to top out. Sequestration is going to bring the market down. Northrop Grumman is already planning on laying off/ furlough by 10-20% of it's work force from 3/1 to 4/30. It's a lot. The other aerospace companies except a few are following suit. and smart money is moving out of the sector. For working people but on that dip and invest in big oil and their subcontractors.

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