Phil Mickelson is generally regarded as the second-best golfer of his generation (behind only Tiger Woods, perhaps the greatest of any generation). He was also in the news not too long ago for complaining about his tax burden living in California.
One suspects that his reasons to complain have increased recently, if the news reports on the tax bite from his victory in the British Open are accurate.
Mickelson earned $2.1 million for winning that tournament in July and the Scotland Open a week earlier. Due to the impact of various taxes, he will apparently suffer a 61 percent tax burden on his winnings, leaving him with just a bit over $800,000 of that original $2.1 million (not counting his travel, housing and other expenses, including a 10 percent fee for his caddy).
While it might be hard to summon sympathy for someone who still took home more money by playing golf for a couple weeks than some earn in a lifetime, one suspects that even our most rabid Stalinist class warriors would find a 61 percent tax hit a bit excessive. Losing nearly two-thirds of your income to the taxman doesn’t seem fair, however you twist and turn it.
But even if we consider Mickelson’s tax burden as too closely approaching confiscatory, it still begs the question of precisely where that line demarking “fair” from “unfair” lies, of what the top marginal tax rate in any progressive system should be.
Alas, any attempt to answer that question is complicated by both widespread ignorance regarding current tax rates and the logic of progressivity, as well as the tendency in human nature to want to tax everyone else more than oneself.
In a useful column last year in Roll Call magazine, Colin Hanna and Alex Cortes of the think tank Let Freedom Ring noted that survey research has for decades told us that Americans want to tax the rich more, however “rich” might be defined and however much they are already taxed. In support of this claim they cite the findings of an ABC News/Washington Post survey in which 60 percent of respondents supported increasing taxes on incomes of more than $250,000 per year, as President Barack Obama had demanded. Even 39 percent of the Republicans in the survey favored such an increase.
The problem comes when noticing the results from other surveys in which Americans are asked what the highest tax rate should be. Just as polls have consistently told us that Americans want to tax the rich more, they have also consistently told us that their definition of a fair tax code features rates well below the current top rate of 39.6 percent.
More specifically, Hanna and Cortes turn our attention toward the results of a February, 2012 survey by The Hill, in which 61 percent of respondents (about the same percentage who wanted to increase taxes on the rich in the ABC News/Washington Post survey) said no one, not even Bill Gates or Donald Trump, should be required to hand over more than 25 percent of their income to Uncle Sam. No less than 88 percent said the top rate should be 35 percent or less. Only a measly 4 percent of those polled thought the rate should be as high as 40 percent.
So how to explain such dissonant results, where Americans by a large margin say they want to increase taxes on the rich while also saying, out of the other side of their mouths, that the tax bite on the rich shouldn’t exceed a rate well below the current one?
The only plausible explanation for such tax schizophrenia is ignorance-the likelihood that most Americans don’t know what a progressive tax code is, don’t know that their country has long had one, and probably don’t even know how it affects their own tax burden (beyond being aware that there’s a big gap between “gross” and “net” on their paychecks and that April 15th is a bad day).
In other words, socking it to the rich sounds wonderful only up to the point where you start thinking in a more abstract way about what a fair tax system would look like and how that might translate into actual tax rates.
Which is also why liberals who claim that the public supports higher taxes on the wealthy tend to leave out the fact that most people also think tax rates above 25 percent are too high (and almost no one supports the kinds of even-higher rates that they reflexively favor).
In the end, perhaps the source of all this confusion can be found in the fact that we’ve never as a nation had a genuine debate over what kind of tax system we should have, an omission that leaves our current disputes over Obamacare, federal debt, and government shutdowns bereft of any meaningful context (it is after all income taxes that primarily fund the federal government).
So wouldn’t now, amid all of the angst and finger-pointing over the government shutdown, be a good time to start such a debate? To finally have that “ground up” discussion over how big government should be, what it should and shouldn’t do, and how we should go about paying for it?-
———◊-
———
Freelance columnist Bradley R. Gitz, who lives and teaches in Batesville, received his Ph.D. in political science from the University of Illinois.
Editorial, Pages 13 on 10/07/2013