by Richard A. Epstein
February 14, 2013
The golfer Phil Mickelson, who often has his name in the sports pages for his athletic feats, has recently grabbed the headlines for an unconventional reason—he has politely protested California’s new maximum tax rate of 13.3 percent. For Mickelson, who pulls down $45 million per year, that tax generates about $6 million in added revenues for a cash-hungry California; he can then deduct 40 percent of that $6 million in California taxes from his federal income tax. That tax two-step leaves him about $3.6 million short. A three-fold program is thus in order. First, progressive taxation should be abandoned in favor of a flat income or consumption tax. Second, there should be strict limitations on the ability of states to impose onerous restrictions on land use development. Finally, the exit right (moving to another state) offers a simple, low-cost way to supply partial protection against excessive taxes and regulation for current residents.