In America, there are 20 million small business owners who can be further classified as independent contractors (IC).
These entrepreneurs are sole proprietors, consultants, freelancers, or anyone who works alone, without a net, on the marketplace high-wire. When the person coined the term, “Eat what you kill” he was talking about this hardy group. On the scale that measures financial and professional risk, with 10 being “made in the shade,” and 1 being “OMG,” ICs begin with a 0.1 rating and 90% never get above a 2.
Mickelson, 42, is a very successful IC: World Golf Hall of Fame, short list of “Greatest Golfers of All Time” and the greatest left-handed player. “Lefty,” has won 40 PGA tournaments, including four majors, career prize money over $67 million and annual endorsements estimated at $50 million.
Just like other ICs, and unlike NFL, MLB and NBA players, Mickelson has no guaranteed contract. If he plays poorly the first two days of a tournament he is “cut” and leaves without a paycheck. And if his poor play continues long enough, not only do tournament earnings diminish, but endorsements as well. “Phil the Thrill” has earned his wealth.
Recently this native Californian made news by voicing concerns about his state’s increasing income tax rates, that with Federal rates, conservatively puts him well above the 50% level. He lamented that he might have to move, or maybe even retire. If he lived in a state with no income tax, like Texas or Florida, his tax bill would drop more than $7 million.
Many in the press were critical of Mickelson for his comments, saying he shouldn’t complain since after all, how many millions does anyone need? But this is America; we have the liberty to earn and keep as much as we can, the right to voice our displeasure when the government is taking too much, and not apologize for either.
Small business owners agree with Phil and Supreme Court Justice Louis Brandeis, who wrote that while tax evasion is illegal, tax avoidance is commendable. Mickelson’s comments on high taxes were commendable, honest and courageous – too bad he later apologized.
We have just learned the U.S. economy had negative growth in the fourth quarter. One big reason we may now be slouching toward a double dip recession is because small business owners, like Mickelson, are shrugging in response to anti-growth tax and regulatory policies.
A small business owner’s motivation to take risks is in direct proportion to the level of government interference.
Recently on The Small Business Advocate Show, I talked with a couple of pretty smart guys who defend Phil Mickelson’s comments, his right to say what he did, and why his position is on target with small business optimism and growth in the U.S.
Cliff Ennico is a lawyer specializing in legal and tax issues for small businesses, and is a popular instructor at eBay University. He is a frequent contributor to Entrepreneur magazine and the author of The ebay Seller’s Tax and Legal Answer Book and Small Business Survival Guide. His weekly syndicated column, Succeeding in Your Business, appears in dozens of newspapers and websites.
Click on one of the links below to download or listen. We’d also like to know what you think, so please leave us a comment.
So what’s wrong with what Phil Mickelson said about taxes? with Rick Newman
In defense of Phil Mickelson and other small business owners with Cliff Ennico
Why Phil Mickelson was right about taxes with Jim Blasingame