Taxing Olympic Athletes

02
Aug
2012

Taxing Olympic Athletes

Yesterday there was an article on yahoo news about the fact that Olympic athletes are taxed on winning medals. In fact, the headline is:

Winning a gold medal brings a $9,000 tax bill

I skimmed the article and discovered the two following facts:

The United States Olympic Committee rewards Olympic medalists with honorariums. A gold medal brings $25,000. Silver medals get you $15,000. And a bronze is worth $10,000.
The Weekly Standard, a conservative news magazine, ran the numbers and tabulated that the tax bill on a gold is $8,986, silver is $5,385 and bronze is $3,500.

Oh – that makes sense, the athlete’s aren’t taxed on the fact that they received a metal – they are taxed on the fact that they are getting prize money that goes along with it. So, they are getting $25,000 for gold, and have pay back about $9000 to the government – after all it’s prize winnings, kind of like when you win the lottery. Then I noticed the article ended like this:

Come on, government. I know you’re as inflexible as the IOC and couldn’t decide on pizza toppings unless a bipartisan commission deliberated for 13 days, but you can’t make an exception to athletes representing our country in the biggest event in the world? It’s not unheard of: Military members are exempt from taxes when they’re deployed overseas.

First off, let me fact check you yahoo. The only time that military members are exempt from tax is when they are deployed in a combat zone – not just when they are overseas. Any military member stationed in Germany for instance, is required to pay taxes on his income. Secondly, why shouldn’t they have to pay taxes on prize money given to them? If I get a bonus at work for my hard work at my job, I am taxed on it. Professional athletes who receive signing bonus’ are taxed on it. Why shouldn’t Olympic athletes be taxed on prize money they receive?

Scrolling to the comments – I expected to find hundreds of people agreeing with me. Unfortunately, apparently people are idiots, because what I found was comments like:

“This has got to be the dumbest thing ever! You train your whole life to be an Olympian, you win a medal and the govt. is right there to rape you. Winners lose again!”

“Too bad Franklin isn’t old enough to announce her candidacy for Congress then not only could she avoid paying taxes but could also use insider trading to make a killing on investments with impunity.”

”This is simply another case of showing how the federal government is the biggest thief–and criminal–in this country. These athletes are supporting their country, but as usual, the IRS is their with their hand out to take their so-called cut.”

Apparently, the issue is not as cut and dry as I believed.

Do you believe Olympic athletes should be taxed on prize winnings as a result of winning a medal?

http://twitter.com/snuggledeath Dezi

Actually, having lived and worked overseas for years, you are only taxed after 92,500$ of foreign income. Prize money in Europe is never taxed (e.g. if you win the lotto in Paris, you don’t pay taxes). I actually think it’s stupid to tax such a low amount of prize money.
- http://www.howmanyfrogs.com/ Stephanie Dorman
  
  That seems ridiculous to me – not to tax prize money. But aside from that, this is income for a performance – so it should be taxed.
  
  Saying because it’s a low amount of money, you’re effectively arguing that people who make only 30,000 a year shouldn’t pay taxes either. (Which I do not agree with.)
  - http://twitter.com/snuggledeath Dezi
    
    Depending on the size of the family, that’s actually hitting the poverty level. But that’s not the point–if it’s a tax, then it’s there. Olympic athletes don’t actually make a lot of money unless they get sponsorships!
    - http://www.howmanyfrogs.com/ Stephanie Dorman
      
      Also, I’m not sure that Olympic athletes who don’t make a lot of money because they are in college (in the United States) can take the money based on NCAA collegiate rules.
      
      But aside from that – I really don’t understand how you can say they just escape taxes on prize money. I really don’t understand why Europe does it that way. Just because you won it by dumb luck doesn’t mean the government shouldn’t get a share – it’s still income. Do you have estate taxes over there. (If someone dies and you are their heir?)
      - http://twitter.com/snuggledeath Dezi
        
        I inherited a title, land and money from my grandfather and don’t have to pay taxes on it since I’m an American citizen (I have dual citizenship), but Germany has estate taxes on all levels of estate, not just after 4 million dollars like in the US.
  - Eurymakos
    
    I believe everyone making what I make or less should not pay taxes. It’s a great system that everyone in my constituency is 100% for. And my constituency represents a very diverse cross section of me.
http://twitter.com/chemgirljaime chemgirljaime

it’s not like it’s the only $$ they make for being an olympic winner… they get money when they sign on to be a spokesperson… plus being an athlete is their career choice.. why should their career choice not pay taxes? IMO every career choice should pay taxes…. they are still using the things that the taxes pay for …so why shouldn’t they contribute?
- http://www.howmanyfrogs.com/ Stephanie Dorman
  
  EXACTLY! I guess the problem is – do you pay taxes on winnings? And do you consider this winnings?
  
  I don’t because it’s not given out by the IOC – it’s done by the American Olympic Committee and a performance based incentive.
http://www.facebook.com/lizzyespy Elizabeth Espinosa

What’s ridiculous is that people actually think kids who play a sport for fun (whether they’re in the olympics or not) should get the same privileges as military personnel serving and defending their country.
- http://www.howmanyfrogs.com/ Stephanie Dorman
  
  Well – that is true too.