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Olympic Medal Winners Taxed to Death by Jayesh Mehta

OK, maybe that’s an exaggeration, but the way people are reacting to the taxes levied on US Olympic medal winners it sounds about right. The “controversy” is whether the government should tax athletes who are representing our country. In a perfect world, where the athlete is sacrificing themselves for their country, I would agree. But let’s face it, they aren’t fighting a war for us, they aren’t giving up their lives for us, and it’s not like they are completely selfless in their pursuits. This doesn’t mean that they aren’t patriotic, or even bad people, it just means that when they win a medal, they still want their names to be in the history books and to get some adulation. They’re human, everyone wants recognition for a job well done. These same athletes will still train for and compete in other competitions besides the Olympics. Most of these “sports” (I use that term loosely, because all the events are not sports, some are skills competitions), have World Championships each year. Should the athletes who compete in these competitions also be tax-exempt?

Now let’s break the taxes down. One, the figure most people quote is the up to $9000 in taxes for a gold medal. Any accountant will tell you that this amount is high, and doesn’t include deductions that these athletes should and probably do take. These include training, lodging, etc. This number also is for a gold medal winner, who will receive a $25,000 bonus. So without deductions, they still would be taking home at least $16,000. Oh, and that’s if they already earned $380,000 or more (the 35% tax rate), and if they already make that much, what is anyone complaining about? Let’s just say that this is their only income for the year, then they would be paying closer to 15% or $3,851 before deductions and allowances. So they would be making $21,000 before deductions. Read this. Another thing to look at is that if they do win a gold medal, they probably will be hired to do endorsements (if they haven’t already), and even some of the silver medalists will get this benefit. These Games are a stepping stone for most.

A couple of other things to mention. One, they are not paid by the government, they are paid by the Olympic committee. Shouldn’t money that they give as essentially a bonus be taxable? Last time I checked, bonuses are taxed because they are income, just like any charitable organization’s employee’s bonuses are taxed. Secondly, most of these athletes are professionals who have income outside of the Olympics. Should Phelps not be taxed on the medals he’s won? He makes millions in competitions and endorsements (which incidentally he benefited by getting those medals). Will $9,000 per medal hurt him? I’d say not so much. 20 gold medals would cost him $180,000 before deductions, but he still made $320,000 (yeah, I know he has 18 golds, but I didn’t feel like doing that math). Another thing, most of these athletes have their lodging, training, food, etc. paid for by the Olympic committee. What about the athletes who don’t have other competitions to perform in, or are do not get endorsements because they compete in events that aren’t as marketable? Read this article in Forbes. Should athletes who get bonuses for winning medals have to pay taxes? Rubio and Obama don’t want them to pay taxes, and are trying to pass a bill to exempt them. This is just political, they’ve known they had to pay taxes, but now that there is an outcry, they try to garner favor by introducing a bill and terming it patriotic. My vote is yes they should pay taxes, and if the politicians want to exempt the athletes, then they should take some of their income and pay the taxes for the athletes…although $270,000 for 90 golds would just be a drop in the bucket for them.


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