Pro Golfer: Why Work with a 63% Tax Rate ?

[Maverick74]

Quote from rallymode:

You are counting obamacare related increases twice. Medicare (2.9%) + additional medicare(0.9% over 200k) = new tax on investment income. I second the notion that he needs a new accountant who can atleast calculate potential tax increases properly.

I could be wrong but they are two separate taxes I believe. I added the investment income tax which is in addition to the "earned income tax". In other words, the rate went up for both investment income and earned income. It's a form of double taxation and has been at the heart of many tax debates going back 30 years when they started taxing the same income twice.

 

[rallymode]

Quote from Maverick74:

I could be wrong but they are two separate taxes I believe. I added the investment income tax which is in addition to the "earned income tax". In other words, the rate went up for both investment income and earned income. It's a form of double taxation and has been at the heart of many tax debates going back 30 years when they started taxing the same income twice.

Yes they are two separate taxes but they don't tax the same income. The way you have it he would be paying 7.6% on his income for medicare, both wages and investments, when in fact he will be paying a max of 3.8% in each category.

 

[Maverick74]

Quote from rallymode:

Yes they are two separate taxes but they don't tax the same income. The way you have it he would be paying 7.6% on his income for medicare, both wages and investments, when in fact he will be paying a max of 3.8% in each category.

Well, usually when people mention double taxation they are referring to the fact that say a doctor makes 500k and gets taxed on that 500k as earned income and then uses that income to invest in stocks and creates a taxable capital gain. That income was taxed twice. First as earned income then a 2nd time around after he invested that income.

If he has separate entities set up, it get's more complicated.

http://en.wikipedia.org/wiki/Double_taxation

http://www.investopedia.com/terms/d/double_taxation.asp#axzz2Iek5H55g

http://www.wisegeek.com/what-is-double-taxation.htm

I have no idea of how Phil's personal assets are structured. But obviously that will have a substantial impact on his total tax liability.

 

[Bob111]

http://www.irs.gov/taxtopics/tc554.html

+ like i said+real estate + school taxes (if there is any).. etc

 

[denner]

Quote from marketsurfer:

The guy likely has massive write offs ( like any high earning self employed ) I bet he pays way less in reality. surf

Pretty doubtful. I'm sure he pays less than the stated rate, but he gets hit on state taxes in every state he collects prize winnings (which is one of many reasons some top earners will skip the high tax states like Hawaii and California for tour events), amongst other states.

 

[rallymode]

Quote from Maverick74:

Well, usually when people mention double taxation they are referring to the fact that say a doctor makes 500k and gets taxed on that 500k as earned income and then uses that income to invest in stocks and creates a taxable capital gain. That income was taxed twice. First as earned income then a 2nd time around after he invested that income.

If he has separate entities set up, it get's more complicated.

http://en.wikipedia.org/wiki/Double_taxation

http://www.investopedia.com/terms/d/double_taxation.asp#axzz2Iek5H55g

http://www.wisegeek.com/what-is-double-taxation.htm

I have no idea of how Phil's personal assets are structured. But obviously that will have a substantial impact on his total tax liability.

Mav, i am perfectly aware of what double taxation means, but getting back to the subject are you still claiming that his marginal rate is 62.5%? Perhaps change the batteries on that calculator before replying

 

[Bob111]

Quote from denner:

Pretty doubtful. I'm sure he pays less than the stated rate, but he gets hit on state taxes in every state he collects prize winnings (which is one of many reasons some top earners will skip the high tax states like Hawaii and California for tour events), amongst other states.

+1
what you can realistically write off by hitting one white ball?

 

[denner]

Quote from Maverick74:

Here are a breakdown of the numbers (approximate):

Top Federal Tax Rate : 39.5%

Top CA tax rate: 13.3%

Medicare Tax (no max limit) : 2.9%

Payroll tax increase for all Americans: 2%

Obama care tax: 1%

New tax on investment income over 250k :3.8%

Let's get out the calculator boys:

I get 62.5%

Phil was right.

There is a very good reason just about every guy on the PGA Tour lives in either Texas or Florida. 20-30 years ago it wasn't uncommon for those guys to live in California, but I'm almost certain that there has only been a handful of guys that claim California for residency on their taxes. One of them was Fred Couples.

 

[denner]

Quote from Bob111:

+1
what you can realistically write off by hitting one white ball?

I suppose he has some exorbitant travel costs (albeit with his own private jet and flight crew), lodging, caddie expenses, etc, etc...but even with some padded business expenses, the guy was raking in something in the vicinity of 60-70 million per year when you include all of his endorsement contracts, appearance fees and prize money.

Compare that to a hedge fund manager who can use the existing loophole to earn that same amount and get taxed on a large percentage of it as capital gains vs. earned income.

apple's and orange's really.

 

[Bob111]

i see. ty!