Discussions of tax policy rarely include contributions from professional golfers. But the popular pro Phil Mickelson provided a lesson in the realities of demagogic “soak the rich” budgeting the other day when he hinted that he might flee California for more hospitable climes. Florida, anyone?
The Golden State recently passed a referendum raising the state income tax rate on income of more than a million dollars a year from 10 percent to 13 percent. Mr. Mickelson, who earns millions in winnings and endorsements every year—second only to Tiger Woods in that department—pulled out of a deal to buy an interest in the San Diego Padres baseball team because of the higher tax rate. And, in an unguarded moment after a tournament, he hinted that he might move because of high taxes.
Although he later apologized for his remarks, Mr. Mickelson confirmed what this page and others have argued for years. If governments continue to raise taxes on high earners, they will move elsewhere. In fact, Mr. Woods chimed in after Mr. Mickelson’s remarks, saying he had moved to Florida—where there is no income tax—from California for precisely that reason.
New Yorkers rightly take pride in the city being a place like nowhere else on earth. But the Big Apple’s many virtues will not keep higher earners here if they believe local government treats them like an ATM. Successful people can enjoy the city while maintaining residences elsewhere—it’s a simple fact of life.
That’s why it’s critical that the next generation of city leaders understands the fiscal legacy of Michael Bloomberg, who, of course, gets this issue in a very personal way. Mr. Bloomberg dealt with multiple budget crises without resorting to significant tax increases. Gov. Andrew Cuomo has followed Mr. Bloomberg’s lead, resisting calls to implement so-called “millionaires’ taxes” even though his fellow Democrats in the State Assembly love the idea. The state’s tax rates are the lowest in years—those who make $2 million a year paid about 8.8 percent in state taxes last year, down from 8.9 percent in 2011, and significantly lower than California’s new rate.
But there are signs that high earners are anticipating a change in New York. The Post noted the other day that officials in Palm Beach, Fla., are having great success in luring hedge-fund executives to their sunny, low-tax state. The officials in Palm Beach don’t even have to advertise—business, they say, is falling in their laps.
New York City offers cultural opportunities that Palm Beach will never match. But for many high earners, the bottom line is, well, the bottom line.
The next mayor may not be a golfer. But he or she ought to listen to Phil Mickelson and Tiger Woods. They speak for lots of people—even some who wouldn’t know a sand wedge from a cheese wedge.