Forbes Magazine lists Phil Mickelson as the world's 7th highest paid athlete, with prize money earnings of $4.8 million and endorsements of $43 million for a very comfortable $47.8 million a year.[i] With his beaming smile, swashbuckling style of play, beautiful wife and children, $47.8 million a year; one could call them the All American Family.
What's not to love about Phil? After signing autographs at the Western Open autograph tent some years ago, he picked my son out of those still in line and signed his visor for him as he was leaving. As a golf fan, I agonized with him for years as he struggled to win his first major and step out of Tiger's shadow.
A Slight Hiccup
He had a slight hiccup earlier this year in January when he mentioned to reporters that he might have to either quit playing golf or leave his home in California because he was paying a total combined tax rate (federal, state, local, unemployment, Social Security, disability) of 62 or 63%. This though assumes that he has no tax planning or deductions. CNBC interviewed several accountants and the consensus was that with even the most basic tax planning he would pay around 50%.[ii] Does anyone believe that there is any American with $47.8 million a year in annual income who has only the most basic tax planning? Of course not, Americans with that kind of income have the most sophisticated accountants working for them to reduce their taxes as much as is legally possible. Certainly in some cases, as much as illegally possible, although I in no way believe that Phil is in this latter category.
Website TheRichest.org estimates Phil's net worth at $180 million.[iii] One would assume that much of this is invested and sheltered from taxation to the greatest possible degree. Also to be assumed, is that the income from his investments that is subject to taxes would be taxed at the lower capital gains rate of 23.8%.
We can only assume that Phil, with $180 million to invest, has significant income outside of his paltry $47.8 million in prize winnings and endorsements. But even if he has invested badly, has no investment income at all from his $180 million and actually pays a total 63% in taxes on $47.8 million in earnings, that leaves him and his family with only $17.7 million after taxes to scrimp by on each year. We can feel your pain Phil.
Phil issued this statement the day after his comments on taxes were reported.
"I absolutely love what I do. I love and appreciate the game of golf and the people who surround it. I'm as motivated as I've ever been to work on my game, to compete and win championships…
I'm like many Americans who are trying to understand the new tax laws. I certainly don't have a definitive plan at this time, but like everyone else I want to make decisions that are best for my future and my family.
Finances and taxes are a personal matter and I should not have made my opinions on them public. I apologize to those I have upset or insulted and assure you I intend to not let it happen again."
He apologized for making his opinions public, not for having the opinion that he deserves to keep more of his $47.8 million per year, while:
- Phil's countrymen and women enjoy a real unemployment rate of 23%, counting all those out of work who want to work and those working only part time that need the income from a full time job.[iv]
- For those in Phil's class that think U.S. government spending is too high; the U.S. ranks 144th of 160 countries surveyed in national government spending. The U.S. federal government spending is 19.9% of U.S. GDP (gross domestic product). That ties us with impoverished Chad.[v]
- The Organization for Economic Cooperation and Development (OECD) ranks the U.S. as the 3rd worst country for inequality and poverty, trailing only Mexico and Turkey.[vi]
- The OECD ranks the U.S. 5th from the bottom in overall social justice ranking,* trailing only Turkey, Mexico, Chile and Greece. * combining poverty rate, poverty prevention rate, child poverty rate, senior citizen poverty rate, income inequality, pre primary education, and health rating.[vii]
- Helsinki-based World Institute for Development Economics Research of the United Nations University Study reported in 2006 that the richest 2% of adults in the world own more wealth than the bottom 98%.[viii]
- Half of all U.S. kids will be on food stamps at some time during their childhood.[ix]
- U.S.corporate profits are at an all time high, wages at an all time low and the percentage of Americans working is at a 30 year low.[x]
While Phil and his fellow golf tour players enjoy ever increasing purses and earnings every year, he might be interested to know about income gains for the rest of us.
During Clinton's presidency 45% of all income gains went to the top 1%.
During Bush's presidency 65% of all income gains went to the top 1%.
During Obama's presidency 93% of all income gains went to the top 1%.[xi]
The question is with 93% of all income gains going to his 1% class, wouldn't an All American guy like Phil be in favor of just a little more income equality for the rest of Americans in the poor and working class? One of the ways to do this is to increase taxes on the very wealthy so that we can at least keep the poor alive. By doing so there is also a definite benefit for Phil's class, the ever expanding pool of unemployed poor keeps wages down for those of us in the working class that are still working. MBA types that handle guys like Phil's extra cash like to call this a "Win, Win." Socialists refer to this huge permanent class of unemployed created to depress wages for the working class as "supernumeraries" or extra numbers. Their misery is necessary for the health of the capitalist system.
No Austerity Program on PGA Tour
Prize money for Phil and the other tour players has increased from $5.5 million in 1970 the year Phil was born to $279 million in 2012. In other words Phil is playing for 50 times the money ( 8 times after adjusting for inflation) that tour players played for when he was born. Product endorsements before he was born amounted to little more than free golf balls and shirts, not the multi million dollar contracts of today. We have already seen that the prize money of $4.8 million that Phil won last year is chickenfeed compared to the $43 million he racked up in product endorsements.
He endorses Barclays Bank prominently on his golf shirts and KPMG Accounting on the goofy looking hat he wears. Who are these noble institutions?
Barclays Bank and the LIBOR Scandal
Barclays Bank is at the root of the LIBOR interest rate scandal that conservative Bloomberg News states "has the potential to become one of the most costly and consequential in the history of banking."[xii]
"Libor, the London inter-bank lending rate, is considered to be one of the most crucial interest rates in finance.
It underpins trillions of pounds worth of loans and financial contracts.
So, when Barclays was fined £290 million in June last year after some of its derivatives traders were found to have attempted to rig this key rate, already weak public confidence in banks was harmed further.
The scandal led to the resignation of both Barclays chief executive Bob Diamond and chairman Marcus Agius."[xiii]
LIBOR stands for the London Inter-Bank Offered Rate a benchmark interest rate that influences hundreds of trillions of dollars in financial contracts around the world. The $450-$600 million total fines Barclays paid in the U.S. and U.K. are only a drop in the bucket to the illegal gains Barclays enjoyed by rigging the LIBOR rates. The LIBOR rates set the benchmark for just about all interest rates, including consumer loans, home mortgages and municipal bonds that directly affect the working class.
U.S.Commodity Futures Trading Commission Press Release
June 12, 2012
CFTC Orders Barclays to pay $200 Million Penalty for Attempted Manipulation of and False Reporting concerning LIBOR and Euribor Benchmark Interest Rates
"Washington, DC– The U.S. Commodity Futures Trading Commission (CFTC) issued an Order today filing and settling charges against Barclays PLC, Barclays Bank PLC (Barclays Bank) and Barclays Capital Inc. (Barclays Capital) (collectively Barclays or the Bank). The Order finds that Barclays attempted to manipulate and made false reports concerning two global benchmark interest rates, LIBOR and Euribor, on numerous occasions and sometimes on a daily basis over a four-year period, commencing as early as 2005.