Natalie doesn’t live here anymore
Some top athletes flee California to avoid high taxes. Should we reform or say good riddance?
On June 26, Natalie Gulbis had the biggest payday of her career. The golfer from Citrus Heights finished tied for fourth place in the LPGA Women’s U.S. Open at Cherry Hills, her top finish since turning pro in 2001. Her success in the tournament came with a hefty $272,723 paycheck, not bad for four days of work. But, though Gulbis hails from the Sacramento area and was weaned on local courses such as Whitney Oaks and the Lighthouse Marina, the state of California won’t see a cent of tax revenue from a native daughter’s success. That is because Gulbis, like many prominent California-born sports stars, has moved to establish residency in an income-tax-free state before her biggest paydays as a professional athlete.
Gulbis’ career earnings are inching toward $1.5 million, not including the endorsement and reality-TV deals that have followed the local blonde who is often deemed the Anna Kournikova of golf, a blond tennis player turned model superstar.
According to Gulbis’ agent, her hectic schedule wouldn’t allow her time to comment for this story. Gulbis, of course, is not the only sports star to leave the Golden State in search of less-taxing lands. She is not even the only Sacramento-area golfer to have resettled in Nevada. Scott McCarron, who has spent a decade on the PGA tour and amassed more than $9 million in earnings, resides in Reno. McCarron’s agent told SN&R that although the golfer moved to Reno to be closer to his wife’s family, taxes “were a consideration.”
The state’s best-known golfer, Tiger Woods, abandoned California for the tax-free confines of Florida when he signed a lucrative $40 million endorsement deal with Nike in 1996. With California’s income-tax rate set at 9.3 percent on top earners, Woods saved himself nearly $4 million with the move. And with his total PGA tour winnings surging beyond $57 million this year, Woods continues to save millions by residing in income-tax-free Florida.
Republican Assemblyman Ray Haynes said, “I know of at least one accountant—mine—that is counseling his wealthier clients to set up residence in Nevada. He tells them that they can pay cash for a house based on the savings on income taxes from living in Nevada, not California.”
Haynes believes California is at a “tipping point” where new taxes will drive rich residents to income-tax-free states like Nevada, Florida and Texas. But raising taxes on the rich is exactly what Democratic Assemblywoman Wilma Chan proposed earlier this year in Assembly Bill 6. The bill would reinstate the 10-percent and 11-percent personal income tax on the state’s high-income taxpayers, specifically appropriating the additional revenues to support K-12 and community-college education programs.
Although Democratic leaders strategically tabled their demand for new taxes in recent budget negotiations in order to quickly pass a budget and gear up for this fall’s special election, many in the Democratic Caucus still favor the taxes-for-education model of A.B. 6 and have vowed to renew the fight soon.
“I have not run into one individual in my district who doesn’t like the idea of paying a little more in taxes to shore up the education system,” said Democratic Assemblyman Paul Koretz, who represents some of the more well-to-do parts of Los Angeles, including Beverly Hills. “I don’t believe there is a chance in hell that there will be an exodus of millionaires because they are paying a tiny fraction more in taxes.”
But some affluent Californians like Natalie Gulbis already have moved. Thus far, 2005 has been a good year for the 22-year-old golfer and Granite Bay High School graduate. Besides her fourth-place finish at the U.S. Open, Gulbis has had six top-10 finishes and earned $688,000, which ranks fifth on the women’s tour. But at 5 feet 9 inches, with blond hair and blue-green eyes, Gulbis has attracted as much attention for her photo shoots as for her golf shots.
“My biggest concern is with my golf game and what it is going to take to be a better more consistent player,” Gulbis writes on her Web site. “I have hired a great team around me that takes care of the marketing. … I am really excited to be competing against the best in the world right now and want to continue to improve my game. That is really my only priority right now.”
With two successful calendar shoots; a photo spread with FHM magazine, a men’s publication known for pictures of scantily clothed women; and comparisons to Anna Kournikova, Gulbis’ career, as well as her earning power, is on the rise. Case in point: When SN&R was trying to track down Gulbis, she was spending her evening at the Playboy Mansion. She has already garnered endorsement deals with TaylorMade; Adidas; Titleist; Met-Rx; and, of course, a swimwear line, Ricochet. And on July 19, her very own reality-TV program, The Natalie Gulbis Show, aired for the first time on The Golf Channel.
Gulbis’ agent, Christopher Murray, told SN&R that she left the Golden State for greener tax pastures, relocating in tax-free Lake Las Vegas, Nev. Since then, she has teamed up with golf instructor Butch Harmon (of Tiger Woods fame) and bought a home in the area.
But whether Gulbis earns her money as a model, as a spokeswoman or on tour, none of it will flow into California’s tax-revenue coffers. Gulbis is just one individual. Koretz said what really matters is whether her experience can be generalized.
“If you are an athlete that spends most of your time on the road, it might not matter as much where you live,” Koretz said. “But for most folks who live in one place most of the year, it does.”
Yet, even in the world of sports, some professional golfers have chosen to stay in California, including Sacramento natives Kevin and David Sutherland, who have earned a combined $10 million as pro golfers.
“I don’t have any family in Las Vegas, and I love it here in Sacramento,” said David Sutherland, who currently is recovering from injury and hoping to rejoin the PGA tour next spring. “I love going to the mountains and the golfing community in Sac, and so does my brother, so I never had any desire to remove myself from it.”
When Assemblywoman Fran Pavley, another Democrat representing wealthy outskirts of Los Angeles, was queried about whether residents in her affluent district would flee because of higher taxes, she quipped, “You haven’t been to my district. If you lived along the Pacific Ocean or the Santa Monica Mountains … yeah, you can’t find that in Nevada.”
Haynes concedes that California “has the best weather on Earth” and that “it’s hot and muggy and you get hurricanes in Florida,” but he still believes that the constant threat of new taxes is driving away more-affluent Californians.
Ultimately, the behavior of billionaires, millionaires and other top-tax-bracket occupiers remains a mystery. According to the Franchise Tax Board, there has been no exhaustive survey of whether raising the income-tax rates on the rich would spur an exodus of the affluent from California. Instead, policymakers are left with only anecdotal evidence when deciding the fate of tax-the-rich bills like A.B. 6. And for every Natalie Gulbis and Tiger Woods, there is a David Geffen, DreamWorks co-founder, or a Lawrence Ellison, of Oracle fame, billionaires who continue to live, and pay taxes, in California.