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.
One of these ICs is Phil Mickelson, professional golfer.
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.
Write this on a rock…A small business owner’s motivation to take risks is in direct proportion to the level of government interference.
Jim Blasingame is one of the world's leading experts on small business and entrepreneurship. He is the creator and award-winning host of the nationally syndicated radio program, The Small Business Advocate® Show. In addition to his weekly columns, Jim is the author of two books; Small Business is like a Bunch of Bananas and Three Minutes to Success.