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Olympic-Sized Taxes

Posted: August 20, 2016 at 3:46 pm   /   by   /   comments (0)

By Matthew Foldi

Maryland’s reputation for blue crabs now has a rival for its Gold Medal tally. If Maryland were a country, it would rank among the world’s top ten countries to win Gold Medals.

Michael Phelps and Katie Ledecky have been making Marylanders proud since well before the Rio Olympics started. In fact, the Baltimore Ravens stopped playing a preseason game to watch Phelps win his 22nd Gold (this was clearly a good omen for them, because they beat the Carolina Panthers 22-19).

In addition to this positive attention, Phelps and Ledecky, as well as every American athlete to medal in the Olympics, are also getting recognition from Uncle Sam in terms of the taxes they have to pay on their winnings. Maybe this is the real reason for the Olympic star’s famed Phelps Face.

In the eyes of the IRS, winning a Gold Medal is the same as winning the lottery, and you are taxed accordingly. However, the comparison between winning something through a pure stroke of luck and winning the Gold by proving you’re the best in the entire world through strenuous competition makes no sense, and most countries waive the fees that their winning athletes would have otherwise had to pay.

Back in 2012, Marco Rubio introduced a bill to ensure that Olympians avoided taxes on their winning, and a similar version was passed this year. Its House counterpart is still in committee, but, if passed, President Barack Obama is expected to sign it since he has previously expressed his support for such measures.

How much is each Olympian charged? A Gold Medalist receives $25,000, a Silver Medalist receives $15,000, and a Bronze Medalist receives $10,000. However, they don’t keep nearly that much, according to a study by Americans for Tax Reform, concluding that these medalists owe as much as $9,400, $5940, and $3,960 for each win.

There’s more. Athletes are charged not only for their prize money, but also on the value of the medals themselves!

In case this seems trivial, consider athletes such as Simone Biles and Michael Phelps, who have both won several Golds in a single Olympics. Both Biles and Phelps are considered among the best athletes in history in their respective sports (Phelps even broke a world record set by Leonidas of Sparta over two thousand years ago!)

Biles will owe as much as $43,500 in taxes on her winnings, and Phelps will pay as much as $55,000. Is this really how we want to treat the man who carried our flag into the Parade of Nations? I don’t think so. Fortunately, this seems like an issue with enough bipartisan support for it to be resolved by the time Maryland athletes are sweeping the 2020 Tokyo Olympics.