Free Markets, Free People

Law to exempt Olympians from taxes the wrong answer

I know there are some out there that will say, “hey you were whining the other day about taxing the winnings of Olympians”, weren’t you?  And now a politician plans to fix it and you bitch?!”

Yes.  Yes, I do.  Because this is exactly the wrong way to go about it:

Sen. Marco Rubio introduced a bill Wednesday to eliminate the federal government’s tax on Olympic medals, saying the levy amounted to yet another way the government tries to punish those who succeed.

Athletes who win a gold medal also earn a $25,000 honorarium — and with it an $8,986 tax bill to the IRS, according to Americans for Tax Reform, which crunched the numbers. That covers both the honorarium and the tax on the value of the gold in the medal itself.

The silver medal tax comes to $5,385, and the bronze medal tax is $3,502 — including $2 for the value of the bronze medal itself, and the $10,000 honorarium.

That could leave amateur athletes — in many cases still teenagers — facing stiff tax bills when they return to the U.S.

Mr. Rubio said that shouldn’t happen.

Of course you can make special pleadings for all sorts of types of special interest taxpayers, can’t you? 

But isn’t taxation supposed to fund the legitimate functions of government and be fairly applied to everyone?

How does exempting special constituencies because of their, well, “specialness”, do that?

Certainly Olympic level (and other) athletes compete in other competitive venues and it wouldn’t be at all unusual for them to win some sort of honorarium there.  So why is that taxable and this isn’t?

Quite simply visibility and outrage.

That’s no way to run a government.  There’s nothing rational about this exemption.  It is as arbitrary as many of the taxes we suffer under.

Important issue?  After the economy is up and running again, it is time to push – and push hard – for a total revamping of the tax structure and code in this country.

We suffer one of the least representative and certainly the least fair or equitable tax codes in the world.

Time to take it apart and start over again.  And this time, let’s make it impossible for Congress to fiddle with it in terms of rewarding or punishing special constituencies arbitrarily at its whim

~McQ

Twitter: @McQandO

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16 Responses to Law to exempt Olympians from taxes the wrong answer

  • Of course you can make special pleadings for all sorts of types of special interest taxpayers, can’t you?

    Yes, you can.  And successfully, too.  Which is how (partly) we arrived at the abomination we have for a tax code.
    Our best people HAVE to be guided in office.  Otherwise, they lose focus on just such atmospheric crap.
    They have to be kept on the path to RADICAL, FUNDAMENTAL REFORM.

  • Until such time as the government gets serious about tax reform and what taxes are for (funding the government, not social change) I’ll support just about any exemption anyone can get.
    The taxpayers are fleeing predation so it makes sense to help anyone you can.

    • I understand tkc and certainly feel that way as well about the current tax code. The entire tax code needs to go, all of it, no exceptions. Put the new one together from scratch, from the ground up, eliminate exemptions, make it simple and use it for the express function of funding legitimate government, and nothing else.

      • While the tax code is a mess and needs to be fixed the 800 lbs gorilla in the room is government spending.  I see about as much emphasis on fixing the spending problem in Washington as I see in fixing the cronyism in the tax code.  Which is to say, “None.”
        I’m really at a loss for what to do.  The biggest danger to my own financial well being is my very own government.
         

  • Not a single thing I disagree with here. I don’t doubt that if we do come up with a new system, the legislative gifts will start all over again, but that is hugely preferable to continuing with the disaster we have.
     
    Scrap it, ditch all deductions, create new rates that reflect the actual amount that the government needs to raise. Make it progressive, include SS and Medicare in the new structure. One tax, everybody pays.
    That ought to help in getting people behind the actual spending cuts that should take place.

    • As long as your idea of “progressive” isn’t what I fear (say, European levels of progressive rates), then that’s all fine and good. Especially if we stop withholding from paychecks, and get everyone to write a check once a quarter, the way we self-employed folks do now. That way, they would see for themselves regularly just how much government is costing, which would create even more pressure to cut spending.

      But as you are fond of chiding everyone here, how do you practically get to such a point? We have an entire adult population that has been indoctrinated to believe that Social Security is some kind of combination pension/insurance plan. They pay in money, and as far as they are concerned, they later get back their money.

      Now, it’s never really worked that way. But I don’t see how it’s possible to convince the average American to ever accept the idea of rolling Social Security in with general taxes. It destroys the illusion they have about what kind of program it is.

      • Recent analysis says we have THE most progressive tax rate of the industrial nations.
        If we are doing that crap, let’s pro-rate access to the courts , too, for instance.
        There is NO moral argument for some of us to pay little or none for our government, and for others to foot the bill.

      • I suppose that you would have to run parallel tax codes for awhile which is a bit like that AMT is today but taxpayers could choose which one to file. Then you remove the old one.

      • “Especially if we stop withholding from paychecks, and get everyone to write a check once a quarter, the way we self-employed folks do now. That way, they would see for themselves regularly just how much government is costing, which would create even more pressure to cut spending.”
         
        Damn straight!

      • But as I see Oldman’s point about parallel codes, what I see is some gang of Rubios ‘fixing a problem’ during the implementation that leaves us with twice as much tangled pasta, and no fix.
         
         
        How about a plan where they draw up the plan, they pretend to implement it, everyone and his dog examines the hell out of it, they find the flaws, address them, pretend they implemented it, and do that cycle for, say, an entire electoral period of senators, congressmen and Presidenters.   THEN actually make it a law.   I’m so tired of them delivering buggy legislation because the have no QA.

      • That is an interesting point, but as you point out, it is an illusion anyway. I am sure liberals would oppose the idea BECAUSE it destroys the illusion and would thus make it less difficult to change the system. But since the system desperately NEEDS changing, this may be a way of getting to that.

        We should make the tax supported SS system needs based (over time), and allow for the creation of tax deductible contributions to private accounts.

        Funding these programs with the general fund would do that.

        As for progressivity, we have tremendous progressivity on paper, and generally in reality, but when you include ALL taxes (payroll taxes ARE taxes) and when you include the reduced rates for people that find a way to pay themselves in capital gains, there are quite a few deviations.

        In any case, I am not arguing for more progressivity, just pointing out that we need to have a progressive tax system. It could be 15% across the board with an income threshold. The simpler the better.

        • “It could be 15% across the board with an income threshold. The simpler the better.”
           
          Sign me up.

  • BTW, the numbers in the WT article assume that the athlete is in the top bracket, ie 8986/25000 = 36%, which may be far from the truth.

  • The medals portion shouldn’t be taxed or at a minimum, taxed deferred.  Someone obtaining a medal shouldn’t theoretically be forced to pawn it in order to afford the taxes of winning it.  Maybe hit them up when they sell it.
     
    Believe it or not, this isn’t a contest of just individuals.  Nobody else in the world looks at it that way.  These people going represent the US.  They shouldn’t be punished by the US for winning.

  • Because the answer is always – “ah, a problem!   ah!  A QUICK FIX! (take this pill, drink this drink, strap this device to you to change your body,  a better you in 15 minutes!  your mileage may vary, these results not average…)   It’s the American WAY.
     
    Even someone like Rubio can’t restrain himself from seeing a target and bringing the heavy guns of government to bear.  Rather than ‘it’s wrong, we need to address it” and be thoughtful, they grab the banner wave it around, run 15 feet backwards jamb it into the ground ’till next time’ and declare victory for themselves.   They’re DOING SOMETHING!   Sure feels good to smite the ‘foes of the people’ in the arena between commercial breaks ( a couple of pats on the head would be appreciated, and vote for me…)