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Olympic gold’s tax costs

By Kay Bell · Bankrate.com
Thursday, February 20, 2014
Posted: 4 pm ET

The biennial patriotism fest known as the Olympics is winding down in Sochi. Folks who enjoy chanting "USA, USA!" are having a great time watching the Winter Games where American athletes have claimed, so far, 25 medals.

And the tax consequences of that sporting success are again being questioned by lawmakers.

Tax price of success

While the IRS no doubt is cheering U.S. competitors, it also is cheering the added revenue the winning brings. The U.S. Olympic Committee awards gold medalists $25,000. Silver medals are worth $15,000 and bronze are $10,000. And that money is taxable income.

If an athlete already is in the top 39.6 percent tax bracket, a gold medal payout will add $9,900 to his or her tax bill. For an athlete who's not quite that wealthy, the medal tax bite is still steep. Someone in the 28 percent tax bracket would end up paying $7,000 on a golden performance.

During 2012's Summer Olympics in London, legislation was introduced in Congress to exempt the value of the gold, silver and bronze medals, along with the cash athletes earn for their podium finishes. It's been reintroduced this year to offer some relief for the United States' winter Olympians.

Tax-exempt patriotism, politicking

Two of my Texas representatives, Reps. Blake Farenthold and Pete Sessions, along with North Carolina Rep. Walter Jones, are sponsoring the Tax Exemptions for American Medalists Act, also known as the TEAM Act. All three lawmakers are Republicans.

The argument now is the same as it was two years ago. The dedication of athletes who bring the country recognition and honor should also be rewarded by being tax exempt.

Farenthold also took the opportunity with the TEAM Act's introduction to whack the tax code's complexity.

"This needless tax illustrates how complicated and burdensome our tax code has become. We need a fairer system for all, and eliminating this unnecessary tax burden on our athletes is a good way to start," he said in a statement upon introduction of the bill. "Our Olympic athletes are the true embodiment of the American spirit. As they represent our nation on the world stage in the upcoming Winter Olympics, they should be faced with our undying support -- not with excessive taxes."

Slippery tax slope

On an emotional level, I agree with the idea of giving a tax break to athletes who represent the United States in the Olympics.

But what about other international competitions? Shouldn't winnings in those events also get some tax relief?

And how about those ice skaters and snowboarders and their summer game colleagues who don't win, but whose attempts reflect well upon the can-do spirit of our nation? Maybe we should provide them with special tax breaks for their training costs.

Yes, I'm exaggerating. Isn't that what the Olympics are about -- excessive involvement for a couple of weeks in the lives of athletes whom we then forget about until the next televised showcase?

Although the idea is laudable, it's not fair.

The good thing is that this version of the TEAM Act will have the same outcome as the 2012 one. It's going nowhere fast. And that's what should happen.

The motivation for most Olympians isn't the money or even the glory. It's a personal quest by each athlete to do his or her best. Let's thank them and applaud them, but not use them as tax policy pawns.

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Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and co-author of the e-book "Future Millionaires' Guidebook."

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