IRS Punishes Excellence: The Tax Burden on Olympic Athletes
This week, the best of American athletes, who’ve spent years putting hard work and effort into training for their respective sports, are in London for the Olympics.
It’s a wonderfully capitalistic competition- the best, the most talented, the hardest working from around the world competing to see who is the best. Excellence is rewarded with medals, international recognition and the personal satisfaction of knowing that your dedication has propelled you to victory.
Yet, how does America, the supposed bastion of the free market, reward the excellence of their athletes upon their return home?
By taxing them of course.
United States tax law states that U.S. athletes, who face a top tax rate of 35%, must add their Olympic medals and prizes to their taxable income.
Americans for Tax Reform notes that a gold medal is worth $675, a silver medal is worth $385 and a bronze medal’s worth is under $5.
Their is also a cash prize that accompanies each medal won- $25,000 for gold, $15,000 for silver and $10,000 for bronze.
The following chart, from Americans for Tax Reform, shows the tax burden, graduated by medal type, that athletes pay on each individual medal they receive:
|Medal Tax||Prize Tax||Total Tax Burden|
This astounding tax on excellence is made even worse by the fact that U.S. athletes are virtually the only competitors who are taxed for their winnings, because the U.S. is one of the only countries that taxes worldwide income- income earned overseas by taxpayers.
However, Tea Party favored Florida Senator Marco Rubio is making an attempt to end the tax. Calling the American tax code a “complicated and burdensome mess that too often punishes success”, Rubio introduced a bill that would end the tax on Olympic medals.