You would have expected that with the Olympics held religiously every four years the US government would not now be in a scramble to exempt US Olympic medal winners from paying the 35% in federal taxes on the medals and prize money they receive in London.
Olympic Tax Elimination Bill.
If enacted into law, the Olympic Tax Elimination Bill sponsored by Marco Rubio (R – Florida) and Claire McCaskill (D – Missouri) in the Senate, and Aaron Schock (R – Illinois) in the House of Representatives will mean that the gross income of Olympic athletes “shall not include the value of any prize or award won by the taxpayer in athletic competition in the Olympic Games” and would be applicable to prizes and awards received after December 31, 2011.
It was Americans for Tax Reform (ATR) who raised the alarm pointing to the serious tax implications for successful US Olympians who unlike many of their competitors are taxed not on the ‘territorial’ system but suffer taxation on their worldwide income.
The Size of the Tax ‘Bite’.
At current commodity prices the value of a London 2012 gold medal is said to be about USD675; a silver medal USD385; and a bronze medal under USD5. According to the ATR the Federal tax payable on the value of these medals is USD236; USD135 and USD2 respectively.
The prize money attached to the medals don’t escape the hands of the IRS with tax bills on the USD25,000 for gold at USD8,986; the USD15,000 for silver at USD5,385; and the USD10,000 for bronze at 3,502.
Athletes not Welfare Recipients.
Predictably those who disagree with the philosophy of the ATR who advocate a single flat US tax rate have argued that athletes owe much to US taxpayers for supporting their long years of training which allowed them to ‘medal’ at the Olympics in the first place and as such they should be prepared to pay their ‘fair share’ of taxes on their earnings.
Others argue that with the amount of deductions available to the Olympians anybody who pays the full tax bill will do so only because they lack the professional advice to mitigate the very sizeable tax take.
Yet others point to yet another example of the avarice of the tax-hungry Obama-government.
Oh, the Tears!
I will admit to being very surprised at the amount of federal tax imposed on the earnings of these élite athletes and now fully understand the tears that flow so easily from the US Olympians as they clutch their medals; eyes raised to the sky; and the lyrics of the Star-spangled banner reverberating around the arena, thinking no doubt about the taxes!!