By Ken Berry
US swimmer Nathan Adrian won a gold medal in the 100-meter freestyle race by edging out his nearest challenger by a mere one-hundredth of a second. Thanks to that millisecond victory, Adrian will owe at least $6,250 in federal income taxes.
It's not just the value of the gold medal that's causing the tax problem. The US Olympic Committee rewards medalists with honorariums. The payoff for a gold medal is $25,000, $15,000 for a silver, and $10,000 for a bronze. Therefore, if Adrian is conservatively in the 25 percent tax bracket in 2012, winning the gold will cost him $6,250 in tax on the honorarium, or $2,500 more than he would owe if had placed second. If Adrian manages to reach the 35 percent bracket due to revenue from endorsements and appearances, the tax difference is $3,500.
No one is exempt from this tax fallout. All medalists, from the greatest Olympian medalist in history, Michael Phelps, to high school senior Missy Franklin, must pay taxes on their haul in London.
The media has been all over this story this week. Responding quickly to the reports, Senator Marco Rubio (R-Florida) and Representative Blake Farenthold (R-Texas) have proposed new legislation that would exempt athletes performing in the Olympics from the federal income tax.
"Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness", said Rubio. He added that the athletes shouldn't have to worry about an extra tax bill waiting for them when they come back home. Proponents of the Olympic Tax Elimination Act have drawn comparisons to the tax exemptions available to military servicemen and servicewomen who are deployed in combat zones around the world.
Although the bill is likely to gain favor while the Olympic fervor continues, it won't even be considered until Congress returns from its month-long recess in September.
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A Secret Deal to End the Tax War:
Romney and Rubio Prove They Have a Good Sense of Humor
Olympic Medal Bill is Just a Diversion to Hide Real Tax Reform
Deal
Each year the government gives away $1.1 trillion through
tax expenditures and most of the money goes to people who do not really need
the help. There is only one tax plan designed to eliminate all loopholes and
revive the economy in the process. It measures wealth and economic need. In 1995
half of America shared only 3.6% of the wealth. By 2010 this share was only
1.1% for a wealth gap not seen since the Great Depression of 1929.
The 2-4-8 Tax Blend lowers income tax rates to 8% by
eliminating tax expenditures and replacing job killing payroll taxes with a net
2% wealth tax (excluding $15,000 cash and retirement funds). Businesses would
pay the same 8% income tax rate and a 4% VAT.
Congressional representatives have been discouraged from
speaking publically about the plan before the election because it is strictly a
nonpartisan plan which will actually fix the economy, Social Security and
Medicare without government spending. Members who have pledged to fix the
economy or die trying say the reforms also comply with ATR’s bipartisan no-tax
pledge. Rich, poor, Muslims, Latinos, gays, big oil companies, small
manufactures, Democrats, homeowners, S corporations, women, farmers, Olympic
medal winners and Catholics would all be taxed with the same very low rates.
Enjoy the rest of your day.
Eugene Patrick Devany, JD, MPA
www.TaxNetWealth.com
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Thanks (0)Rubio: The tax code is complicated, so let's add another exemption.
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Thanks (0)In all discussions of this, I fail to see any mention of the expenses that offset the liability. The cost of the trainer and the travel expenses would bring the liability down significantly. What am I missing here?
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Thanks (0)