No Tax Breaks For Winnings From The Olympics, Please
Senator Marco Rubio, R-Florida, has introduced the Olympic Tax Elimination Act which would protect American participants in the Olympics from having to pay taxes on their winnings. America, like many other countries, pays athletes for medals. Gold medalists get $25,000, silver medalists get $15,000 and bronze medalists get $10,000.
That’s income, and it’s susceptible to taxation, as is the value of the medals themselves. Senator Rubio doesn’t like that, and President Barack Obama has his back.
But is the law good policy?
I don’t think so. In fact, I think Rubio’s bill is a bit of pointless (albeit topical) grandstanding.
First, consider that most of the Olympians probably aren’t paying taxes on their winning anyway. While $25,000 for a gold medal is a lot of money by most people’s standards, it also takes a lot of expensive training to win one. Or even a bronze, for that matter. If these athletes were smart, and I’m sure most of them are, they’d be treating their athletic careers as a business and deducting their expenses. Since most of these athletes are, no doubt, spending as much or more on training, travel, coaches, etc., as they win from competition, their tax deductions likely wipe out their liability.
For most of them, expenses probably exceed their winnings, so the deductions can be carried forward and applied to future tax liabilities as well.
Even if the Olympians aren’t treating their athletic careers like businesses, they can still take personal deductions for expenses, though they’re capped and can’t be carried forward.
I’d like to see an analysis of the actual tax liability most Olympians carry on their winnings. My guess is it isn’t much for the reasons I just described, and if it is a lot, these athletes need a good accountant not a tax exemption.
Which brings me to my second point, which is that I hate specialized exemptions in the tax code. Let’s remember that every Olympian is strictly an amateur. Many of them, particularly the hockey players, are professional athletes. Many of them also have lucrative endorsement deals. While I’m generally in favor of lowering tax burdens, I’m not sure why we should be carving out special exemptions for wealthy athletes.
Or even athletes who don’t make a lot of money from their sports. Why should a bobsledder get a tax exemption for a $25,000 gold medal prize, but not someone who went out and worked and earned $25,000 in some non-Olympic endeavor?
Our tax code is complicated enough as it is. If we’re worried about tax burdens, let’s lower taxes for everybody, not just a few.