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US Lawmakers Look To Abolish Olympic Medal Taxes
Source:
tax-news.com
- Aug 7, 2012
by Leroy Baker, Tax-News.com, New York
07 August 2012
After Americans for Tax Reform (ATR) pointed out that American individuals winning medals at the Olympics would be liable for United States income tax, legislation was introduced in both the House of Representatives and the Senate to provide for their exemption.
The ATR has confirmed that US Olympians are liable to pay income tax on both the medals they earn and also the prizes they receive at the London games. As they face a top income tax rate of 35%, it has calculated the tax they should pay by adding the value of their Olympic medals and the prizes to their taxable income.
At current commodity prices, the value of a gold medal is said to be about USD675; a silver medal USD385; and a bronze medal under USD5. The prizes that accompany each medal are USD25,000 for gold, USD15,000 for silver and USD10,000 for bronze. American gold medal winners will therefore pay tax of up to USD8,986; silver medal winners USD5,385; and bronze medal winners will pay up to USD3,502.
The ATR has noted that US medal winners’ tax liability is another consequence of the US tax code’s taxation of ‘worldwide’ income earned by US taxpayers, rather than the ‘territorial’ system operated by most of the US’s competitors.
As a result, Marco Rubio (R - Florida) and Claire McCaskill (D - Missouri) in the Senate, and Aaron Schock (R - Illinois) in the House of Representatives, have introduced the Olympic Tax Elimination bill, that would exempt US Olympic medal winners from paying federal taxes on the medals they receive in London.
If enacted into law, 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”. This would apply to prizes and awards received after December 31, 2011.
“One of the greatest joys of the Olympics is to watch our athletes perform at the highest levels of competition ,” said Schock. “Apparently, the sacrifices they make for their success doesn’t stop once they receive their Olympic medals. The federal government has to penalize our athletes by taxing them for the medals they have rightfully earned.”
“Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness,” added Rubio. “Athletes representing our nation overseas in the Olympics shouldn’t have to worry about an extra tax bill waiting for them back home.”
Category: IRS
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