TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

A Member of the Law Professor Blogs Network

Monday, January 28, 2013

Phil Mickelson and the Sports Star Tax Migration to Florida and Texas

PhilFollowing up on my prior posts (links below): Wall Street Journel op-ed, Mickelson and the Sports Star Tax Migration, by Allysia Finley:

If Lefty moves to a state with no income tax like Florida, he'll find he has plenty of elite athlete company. ...

The benefit of living in a state without an income tax can be diminished by the "jock tax" that states impose on money earned by athletes when they're playing or training in the state. (Luckily for baseball players, spring training is in no-tax Florida or low-tax Arizona.) But in sports like tennis and golf where athletes can train anywhere in the world, a preponderance happen to migrate to states without an income tax. ...

About 3.5 million Californians have migrated to other states over the past two decades. Almost anywhere they chose to go would allow them to enjoy greater returns on their labor. Is it really surprising that athletes like Mr. Mickelson might be keeping an eye on the leaderboard?

Prior TaxProf Blog posts:

http://taxprof.typepad.com/taxprof_blog/2013/01/phil-mickelson-1.html

Celebrity Tax Lore, Tax | Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341c4eab53ef017d4086def5970c

Listed below are links to weblogs that reference Phil Mickelson and the Sports Star Tax Migration to Florida and Texas:

Comments

How is moving to a state that has a lighter tax burden anything but smart thinking? I advise my clients regularly to move across the river to a No Income Tax State...and shop here in a No Sales Tax State. Of course I would rather pay tax in CA than live in Texas.

Posted by: George | Jan 28, 2013 11:34:05 AM

You can have "no income tax Texas and Florida"....bugs, humidity, huge air conditioning bills, weathering of your house in Florida twice as fast as anywhere else, hurricanes with insurance from the government...takers and high property taxes. I like moderate temperatures, sunny skys and the clean ocean beaches....I may have to pay for it but it is worth it....Save a little but live in a climate that sucks...life is too short to go cheap!

Posted by: Sid | Jan 28, 2013 12:55:38 PM

@George, and we would rather that you stay in California.

Posted by: Matty_J | Jan 29, 2013 5:02:58 AM

Then, George clearly the thing for you to do is to continue to pay taxes in California rather than live in Texas. Thousands of your former neighbors however, would rather live in Texas.

Posted by: Buzz | Jan 29, 2013 5:05:45 AM

It's quite funny that some people here and there say they themselves won't move to a lower tax state. Well, if many of the people around you are moving, then regardless of your own decisions you will be affected. The economy will weaken and your taxes will rise because of the shrinking tax base. And as the saying goes, eventually they'll run out of other peoples' money.

Posted by: scf | Jan 29, 2013 5:27:47 AM

Actually air conditioning costs are reasonable. They are significantly cheaper than what I have had to pay in Ohio, Indiana, et al where cold weather exists. My retirement pay goes a long way because I am not taxed by the state on it like a large number of other states.
George, I cannot express how happy I am that you will not come to my no tax state. The only place I want to see snow is on a post card.
Oh by the way my pool has a nice enclosure over it and I am never bothered by bugs. Come to think about it the bugs don't seem to be a problem when I cut the grass, go for a walk, play concerts outside, or on most outdoors activities.
Now if we can get some of these transplanted Northerners to keep from imposing the very ideas they ran away from on us Some of these people are so dense that they cannot see how those ideas were why they moved in the first place.

Posted by: D | Jan 29, 2013 5:33:41 AM

George, stay where you are, come here, who cares. What we Floridians/Texans really don't want, is for your kind to move here to escape California taxes and then agitate that we install a big intrusive California style government here, which causes those sort of taxes.

Posted by: PaulM | Jan 29, 2013 5:40:58 AM

This is strictly an economic decision. If the value of living in California outweighs the cost of living in California, then stay there. If it does not and it is possible to move, then move. I fail to see why there is any controversy over this. Why are people pounding Michelson for evaluating his options. It is probably because they want some of his money.

Posted by: Rick Caird | Jan 29, 2013 6:03:07 AM

I agree with George. I moved out to California from Texas
25 years ago. In LA you have the beaches, the mountains ,
the mild weather, the exciting entertainment culture. The
state income tax was just a small annoyance.

Until it became a big annoyance. Along with crushing business
regulations. Along with crime news that became so go-hum that
weekly murders got reported in the metro section and not the
front page.
I'm back in Austin where I was born. This place is terrible alright. Hot spells,
cold spells, yahoos galore, traffic unbearable, music capital
for proles.
200 people move to Austin daily; something about low unemployment
or something. Two hundred. Every day.
George is right. Don't move here.
Please.

Posted by: Uncledip | Jan 29, 2013 6:04:37 AM

Don't worry these athletes will still be paying lots of income tax to states. In fact, to lots of states.

If a game/tournament is held in a state with income taxes, usually an athlete has to pay taxes on the money earned in that state. The same goes for entertainers or any similar touring occupation where money is clearly earned in multiple locations (this burned Al Franken a few years ago who only paid income taxes in his home state)

Posted by: Shawn Levasseur | Jan 29, 2013 6:07:17 AM

I would strongly encourage George and other people in California to stay there. It is unfortunate, but when they leave and go to other states, they usually take their silly-ass, lefty political beliefs with them. They don't seem to grasp that Cali's downward spiral is caused by those beliefs. You've already ruined your state; don't come over and ruin mine, too.

Posted by: Jim | Jan 29, 2013 6:20:03 AM

I keep waiting for a pro athlete in baseball, basketball, etc (league team sport with a schedule) to sign with a team in a no income tax state (WA and TN in addition to TX and FL) and then structure the contract so he makes minimum wage for road games and the bulk of his paycheck at home games.

Posted by: Heartless Libertarian | Jan 29, 2013 6:45:32 AM

The problem with migration out of the blue states is that a good chunk of them are liberals. So after the Californians have raised taxes, killed their economy, and bankrupted their state, they move to my home state of Arizona and start voting for the same damn laws and type of legislators that ruined the state they left.
Don't worry liberals, the California and Rust-Belt state influx coupled with the huge illegal immigrant population that the feds are trying to turn in to voters will soon change Arizona to a cesspool of failed socialist ideals and you'll feel right at home.

Posted by: Gilbert_Sundevil | Jan 29, 2013 7:07:10 AM

Mickelson probably doesn't spend half his time at his home. He is always on the road for tournaments and other events. Not only that, but for the difference in taxes, he can upgrade his airplane to the latest Gulfstream.

Posted by: Walter Sobchak | Jan 29, 2013 7:11:29 AM

@George: I have lived and worked in Florida (Tampa/Clearwater/St. Petersburg - 8.5 years), California (Los Angeles - 8.5 years) and Texas (Austin - 8 years) over the last 25 years and can tell you, unequivocally, that there is NOTHING about living in California that is superior to living in Texas or Florida. The beaches in Florida are far superior. Those in California have ice cold water, syringes washing up on shore, and the stretches of sand are filled with recently-paroled former-inmates of the Department of Corrections. As a matter of fact, I would rather spend the weekend at a pleasant seashore like Port Aransas or South Padre Island in Texas than any of the Southern California beaches (i.e., Venice Beach/Santa Monica/Manhattan Beach/Hermosa Beach/Seal Beach/Newport Beach/Oceanside/Cardiff by the Sea/La Jolla/Coronado). Living in California is deficient, not least because of the people there. Every flat surface is spray-painted with graffiti, every moocher has a chip on his shoulder, every politician has his hands (both of them) in your wallet. You can keep California. Please.

Posted by: Stuart (Austin, TX) | Jan 29, 2013 7:46:43 AM

Meanwhile, "competent" tax advisers promote Roth IRA conversions to clients in places like New York and California, so that they can pay taxes before moving to Florida or Texas.

Another advantage to Florida for some athletes is its unlimited homestead exemption. Just ask OJ, who nevertheless is now a resident of no-tax Nevada.

Posted by: Bob | Jan 29, 2013 7:48:20 AM

Hmmm, I moved to Florida and it is 75, sunny and dry six months of the year and 90 and humid the other six months. Not bad at all. Here on the west coast strong hurricanes are a rare event and homes built after 2000 or so have low insurance as they are built to code. High property taxes? Nonsense. Does anyone consider 2K per 100K value exorbitant? The air conditioning issue is another case of people blustering about what isn't true. It doesn't cost much to lower your house 10-15 degrees compared to heating it 50 degrees and more. I haven't had heat or AC on for four months. $150 at most in the summer to AC a 2,300 sq. ft. house. By the way, the beaches here are quite clean, the local government is effective and there are plenty of young people around unless you deliberately isolate yourself. I do miss proximity to mountains, but there are airplanes for that.

Posted by: Peakview28 | Jan 29, 2013 7:52:22 AM

Moved to Florida from Illinois -- have to say that your stereotype is broken -- "bugs, humidity, huge air conditioning bills, weathering . . . . "
Please -- stay in Illinois and California -- we don't need your votes down here!

Posted by: Gary | Jan 29, 2013 7:58:19 AM

Every state has its own form of blood-sucking parasites. I prefer living in Texas to living in California because Texas's blood-sucking parasites (mosquitoes) can be swatted down. California's are a protected species in Sacramento. À chacun son goût.

Posted by: Mark L | Jan 29, 2013 8:04:43 AM

High taxes, earthquakes, wild fires, mudslides, water shortages, a cold ocean, and weird people...California is a paradise!

(Sorry, if this is a duplicate of what I started but for which the system didn't seem to want to post.)

Posted by: Woody | Jan 29, 2013 8:53:58 AM

And of course, as we learn from this morning's news, Florida is one of the best places to go to buy performance-enhancing drugs.

Posted by: Bob | Jan 29, 2013 9:22:25 AM

The bulk of pro golfers make most of their money from endorsements, not winnings, so moving to a low/no tax state makes a lot of sense for them even if they pay state taxes to states where they win money.

Phil can save many millions a year by moving. Then he can use his money as he sees fit. Imagine that.

That is the real problem for the Georges. They need more suckers to help subsidize their CA lifestyle. They want to use Phil's money as they see fit. Mooches.

Posted by: Meremortal | Jan 29, 2013 9:36:01 AM

California is geographically a natural paradise. It is worth more to live here, a lot more, but not infinitely more!!! As beautiful as it is, it has done priced itself out of the market. Also, being a natural paradise does not mean it is naturally easy to live here. California is only inhabitable by 38 million people because of the creation and maintenance of an expensive biosphere. Because otherwise, don't you know, this place is a DESERT!!! THERE'S NO WATER!!! THERE'S NO FOOD!!! THERE'S NO NOTHING BUT BLEACHED BONES ON THE SAND!!!

See what I mean?

Posted by: James Solbakken | Jan 29, 2013 11:24:32 AM

George's argument in favor of CA also applies to Mexico.

George can find the same reality in Baja California, *and* avoid CA State income tax.

Posted by: TTT | Jan 29, 2013 12:14:35 PM

Texas sucks. take it from me I have been here all my life. California is awesome dude! Please stay there. No one should move to texas from anywhere. Its too hot, too many bugs, not enough starbucks, too many pickups, a LOT of people have GUNS, its scary and manly and just uncivilized. All you Prius drivers and yankees and smart, sophisticated people JUST STAY WHERE YOU ARE. You will be much happier THERE and not in TEXAS.

Posted by: reginald | Jan 29, 2013 4:24:42 PM

I moved to Fla. instead of CA when I graduated from law school almost 30 years ago. The pay in CA would have been higher - high enough to offset the then state income tax - but not quite high enough to offset the other higher costs of living, particularly housing. Still, it was a close call: better weather in Cali, less traffic and pollution in Fla. I had the phone in my hand to take the job in Cali, but ultimately decided that Jerry Jeff Walker had a point about getting off that LA Freeway and switched my decision.

I made the right call, as close as it was.

For Phil, this is not a close call at all. He makes the same amount of money whether he lives in CA or Fla. And once he starts playing fewer tournaments, he can spend a whole bunch of time north of Fla. during the 6 months of the year when it is hot and humid down here. He can contribute a healthy portion of his tax savings to worthwhile charities and everyone - well, except the CA state government - is better off.

We look forward to seeing you and your family in Florida, Phil.

Posted by: Vox Clams | Jan 29, 2013 4:36:15 PM