01/29/2013 05:28 pm ET Updated Mar 31, 2013

The Grass Is Always Greener on Someone Else's Course

Phil Mickelson's recent bout of tax-rate envy, from which he made a quick recovery, reflected some widely held misperceptions, the correction of which might lead us to more harmony and better policy.

Mickelson, known as Lefty, is admired both for his outstanding skill and for his magnanimity towards volunteers, spectators, and fans on the course and off, and his pique about taxes seemed out-of-character. Lefty's reaction is understandable, however, given widespread ignorance about relative tax burdens. This ignorance begins at home: most people, including, apparently, Mickelson, have no idea of how much they themselves pay in taxes. Moreover, people often grossly underestimate how much others pay. These mistakes are primarily, but not completely, the result of a complex federal tax system and widespread confusion about the workings of marginal tax rates, which by definition do not apply to every dollar of income. Mickelson, who reportedly earned $45 million in 2012, originally contended that he will pay more than 60 percent of his 2013 income in taxes; it is most likely that his estimate is about 10 percentage points, or $4.5 million, too high.

Mickelson's large but presumably honest mistake probably results from the astonishing absolute amount that he will actually pay in taxes. If Mickelson earns $45 million again in 2013, he will pay, at his new rates, more than $60,000 per day for government services! The flip side, of course, is that Mickelson will need to find a way to scrape by on an after-tax income of $60,000 per day. For some perspective, an annual income of $60,000 would put a family comfortably above the median American family income. That is, if they're lucky those who carry Lefty's bags, serve his meals, wash his dishes, valet and detail his vehicles, etc. will live in a family that earns in a year what Lefty earns after taxes in a single day. Those Americans will probably pay between twenty and thirty percent of that gross income in payroll, sales, excise, and income taxes, though, meaning they'll need to live on $48,000 per year or less in after-tax pay. That's an annual after-tax haul many people in the world will envy, but Mickelson probably won't be one of them.

For those who believe fairness requires every family to pay the same share of total income for government services, Lefty is paying more than his share and the average American is not. Government in America, like most of the rest of the developed world, costs about forty percent of annual gross domestic product. Acting collectively through government, citizens pay for many valuable but costly goods and services: health care, income security, national defense, public education, public safety, infrastructure, interest payments on past government debt, etc. America spends a bit less on government than most developed countries despite our relative extravagance in a few areas such as health care, national defense, and prisons. Passionate protestations to the contrary, it's not reasonable to expect that America could retain our present quality of life with drastic reductions in government spending (and it's incumbent upon those who think we could to specifically detail how that could happen given past and contemporary experience in our own country and others).

Everyone would like to pay less in taxes and it's easy to understand why those paying the highest percentages of their incomes in taxes are particularly unhappy. Mickelson's uncharacteristic and unseemly outburst, though, is even more understandable if he thought he was stuck paying sixty-two percent when others were paying nothing, which he may have reasonably but incorrectly believed. The truth is that the percentage of income that he pays in taxes is probably only about three times more than the percentage that the poorest Americans pay annually, and who, in absolute terms, would need more than two thousand years of wages to equal Lefty's annual income.

It's easy to understand why a professional golfer might believe editorials, politicians and e-mails that spread the myth of an America evenly divided between makers and takers, but it's harder to tolerate the malicious spreading of that fabrication. The toxic and persistent myth of the 47 percent who are merely takers is based on eliding the differences between all taxes and federal income taxes, and the myth of the indolent riding in the wagon while the industrious pull is both incorrect and widely accepted. The lie is spread both by those who do not know better and by those who do but find a malicious and divisive lie more expedient than the complicated truth. A more productive debate about how to best make our tax revenues match our expenditures will occur when more citizens, including wealthy professional athletes, have a better understanding of who really pays how much and why.