Phil Mickelson Hit With 61% Tax Bite on UK Golf Earnings

"Phil Mickelson had a last round for the history books at the British Open, and now he's got a tax bill to match.

"Mickelson, a 43 year-old Californian, won golf's oldest tournament by birdying four of the last six holes. His prize for this impressive feat: £945,000, or $1.43 million. The week before, "Lefty" — as the normally right-handed Mickelson is called, for his left-handed swing — won the Scottish Open, bringing his total winnings for two weeks of play in the UK to £1,445,000, or about $2,167,500.

"But as K. Sean Packard, an expert on pro athletes' taxes, writes at Forbes, Mickelson won't be taking home nearly that much:

The United Kingdom, which has authority to set Scotland's tax rate until 2016, graduates to a 40% tax rate when income hits £32,010 then 45% when it reaches £150,000. Mickelson will pay £636,069 ($954,000, or 44.02%) on his Scottish earnings.

"On top of that, Mickelson has to pay UK tax on a portion of his endorsement earnings in Scotland. Any bonuses he receives for winning these tournaments and moving up in the rankings will also be taxed at 45 percent. And Mickelson's endorsement income isn't chump change: As Packard notes, Roger Federer and Tiger Woods (whom Mickelson defeated at the Open) are the only athletes who earn more in this category.

"And that doesn't exhaust Michelson's tax liabilities from his British triumph. He won't have to pay federal taxes on these winnings, thanks to a foreign tax credit, but the exemption doesn't apply to self-employment taxes, the Medicare surtax, or his home state of California's 13.3 percent take. 

"It all adds up to a rate of 61.12 percent …" Continue here >    

What do you think–when do the additive taxes become excessive? When would you walk away?