Free Markets, Free People

US Olympic medal winners face a taxing experience

Are you watching the Olympics?  Did you enjoy the gold medal performances of the US women’s gymnastics team?

It was nice to see them bask in the glory of the fruition of all those years of hard work and sacrifice.  They reached the peak of accomplishment.  They took the gold.  The stories of the athletes were as interesting as the victory.  Years of monetary sacrifice, hard work, dedication and practice.  Families, who moved to avail their daughter of coaching,  who lived from paycheck to paycheck to ensure money was available for their daughter’s training, the hundreds of meets and competitions, etc.

But hey, we all know they “didn’t build that” themselves.  They traveled on roads to their practice sites and meets, used other common infrastructure improvements and now they get to pay the piper.

It’s time for them to pay up for winning those gold medals, and the IRS will ensure they do.

At today’s commodity prices, the value of a gold medal is about $675 according to Americans for Tax Reform.  And the gold medal brings with it $25,000 in prize money.  The IRS will tax them at 35%. 

So for all those years of hard work, sacrifice and performance, our gold medalists will pay the IRS $8,986 for each gold medal they win.  The silver will cost them $5,385 ($15,000 prize money, and $385 for the medal) and bronze $3,502 ($10,000 prize money, $5 for the medal).

Of course they’ll be about the only athletes in the world so treated because you see, the US is one of the few countries in the world that takes it upon itself to tax the world wide earnings of its citizens.

Because, you know, that infrastructure is everywhere and it’s expensive. </sarc>

But I’m sure we’ll hear from our usual apologists for intrusive government trying to spin these taxes as something both necessary and proper.

Just a note to them – most Americans don’t at all agree with the sentiment that they didn’t build what they now have.   But you have to hope the Democrats keep trying to sell that.    Our Olympians and their tax experience make as good a case against that as any I can imagine.

~McQ

Twitter: @McQandO

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20 Responses to US Olympic medal winners face a taxing experience

  • I view some of the events as nothing more than child abuse. Some of those participants are nothing more than children and have enormous stress put upon them. Not to mention having no normal childhood with the excessive training.

  • Wonder how that works with team sports.

  • FWIW, “Gold” Medals are mostly silver with a gold coating so ATR is way off in its valuation there. There haven’t been sold gold “Gold” Medals since the 1912 Olympics
    Also, as the Reuters article that ATR linked to says, its unlikely that the IRS is actually taxing athletes for the value of their medals (see last two paragraphs)

    • Of course the medals are the least cost of the taxes levied. And, frankly, it’s about the taxation on the whole with which I object, but you knew that.

      • Do you think that lottery winnings should be taxable, or a jackpot someone wins in Vegas?
        As far as the law goes, the prize money is clearly taxable income under the IRC. (I think the theories that the value of the medals is taxable is pure conjecture, though)

        • I find it amazing you would equate winning an Olympic competition with a game of chance.
          Not out of character.  Just amazingly daft.

          • From the Internal Revenue Code (26 U.S.C. Sec. 74)
            Except as otherwise provided in this section or in section 117 (relating to qualified scholarships), gross income includes amounts received as prizes and awards.
            There are two exceptions. One if the award or prize is donated to a charity, the other for certain employee achievement awards. Neither one of them applies in this situation.
            The law on this is clear and obvious. You may not life it, but that’s a different conversation, and one that would require the law to be changed.

          • Oh, we could find monstrous outrage after corrupt madness in the tax code, I have no doubt.  It needs to be scrapped entirely.  It is an affront to any notion of a free people giving consent to be governed.

        • No Doug, I don’t. Sorry. I feel taxes should be collected only fund the legitimate functions of government (as outlined at our founding), most of which would be able to be funded far below the current revenue demands. And there are very fair and equitable ways that could be accomplished. The rest? It belongs to those who earn or even win it.

          • Well I tend to agree with that. But the policy question is why, if at all, prize money of any kind should be excluded from the definition of “income” in the tax code.

          • Because I’m adamantly opposed to the current tax code and really don’t give a rip how they choose to define anything. And yeah, that’s pretty strong and not very productive in terms of answering your question. I find many things in the tax code to be arbitrary and capricious and passed in legislation to either reward one constituency or punish another. That is not the function of taxation is as I perceive it.

            How they define income? Well it’s much the same way they define “rich” these days. Whatever way is most useful in helping them collect even more taxes with today’s definition subject to change on whim.

    • ATR is actually correct in valuing the gold medal at $675.  If they were solid gold they’d be worth in excess of $25,000. Also, Reuters is only claiming that it would be a PR nightmare to tax the value of the medals, not that they will not or do not have the power to do so.

  • The American system of taxing again income that has already been taxed in another country is really quite bizarre. To risk sounding like a certain political “scientist”, most of the rest of the civilized world (even the enlightened socialist ones) recognizes that individuals and companies should be taxed only once. It leads to those really odd circumstances in which Americans actually renounce their citizenship to avoid excess tax. It’s kind of ironic from the country that brought us “no taxation without representation” now spanks its citizens for making money foreign exchange and repatriating the proceeds.
    Mind you, it is highly unlikely the athletes are paying income tax to the Exchequer unless they are actually tax resident in the UK.

    • With respect to the Olympics, Britain is following the same policy that other nations have followed in the past and not considering the prize money taxable under British law (unless we’re talking about British citizens, I presume) so there’s no double taxation here.

    • We have a foreign tax credit to prevent double taxation.

      • But you still have to declare the income to the IRS and apply for the credit, right. Other countries don’t require you to declare income already taxed elsewhere. It makes life much simpler and there is no performance trying to keep your money.

      • Also, and correct me if I am wrong since my memory is a bit hazy on this, aren’t American citizens required to file a tax return every year even if they are not resident in the US and made no income in the US?

  • ” And the gold medal brings with it $25,000 in prize money”

    Sounds like the kids need to make a couple of one-time, tax-free gifts to family members…  “Here you are, sis… Here’s 10,000… winkwink nudgenudge”