Senator Marco Rubio (R-FL) introduced a bill that would make the value of Olympic medals as well as accompanying honorariums, exempt from U.S. federal income tax.
The bill, introduced yesterday in the Senate and entitled the "Olympic Tax Elimination Act," would give a tax break to U.S. athletes who win medals during the Olympics.
In addition to medals, winners also receive honorariums. Those who win the gold receive $25,000 while $10,000 accompanies the awarding of a silver medal. Third place finishers get $10,000 along with their bronze.
American athletes are not only taxed on the honorariums they receive but also on the value of the medals they win. Americans for Tax Reform calculated that, based upon current values, a gold medal is worth $675 while a silver medal is valued at $385. Bronze medals have a value under $5.
Combining the honorariums with the value of the medals, athletes who return to the U.S. from London with a gold medal will owe the IRS an additional $8,986. Sliver medal winners can expect to owe $5,385 for their second place finish while holders of bronze metals will have to pay $3,502 more in taxes.
The bill [PDF] states that "gross income shall not include the value of any prize or award won by the taxpayer in athletic competition in the Olympic Games." The bill's effective date is Dec. 31, 2011 in order to make it applicable to medal winners at the current Olympics.
Rubio was quoted in the Washington Times as saying, "Our tax code is a complicated and burdensome mess that too often penalizes success, and the tax imposed on Olympic medal winners is a classic example of this madness...We can all agree that these Olympians who dedicate their lives to athletic excellence should not be punished when they achieve it."
Contrary to what Rubio said, we apparently do not all agree. An editorial in Bloomberg News opines that taxes are not punishment and medal winners should not receive any special treatment. And writing in the Los Angeles Times, Dan Turner writes there are too many tax breaks already. If new ones are going to be introduced, they should be ones that have an economic or social benefit to society. In the column entitled, "Marco Rubio's goofy Olympian tax giveaway," Turner describes an athlete who would get the tax break as getting "a free ride."
USA Today reports three members of Congress, two Republicans and one Democrat, are introducing similar legislation in the House.